The Russian Finance Ministry has proposed fixing the cut-off price at $60 per barrel in the updated budget rule and fixing oil production at 9.5 million barrels per day, Vedomosti writes , citing a source close to the government.
Representatives of the Ministry of Finance and the Ministry of Economic Development reported that a new design of budget rules is being discussed at the government site, while it is too early to talk about specific decisions. A government spokesman did not respond to the newspaper’s request.
The fact that work on a new configuration of the budget rule (the „old” one is now suspended) is in the active phase, said at the RUIE congress on June 29, Finance Minister Anton Siluanov. He said that the government next week – that is, the week of July 4 – will discuss issues related to exchange rate formation. In the context of its excessive strengthening, the Ministry of Finance proposes to influence the ruble exchange rate through a new budget rule, while interventions should be carried out through the currencies of „friendly” countries.
The opponent of the Ministry of Finance is the Ministry of Economic Development. “The Ministry of Finance is now proposing a construction of a budget rule, which is that we cut costs and enter the foreign exchange market with this money, demand for the currency and thereby increase the exchange rate. From our point of view, we still do not see this proposal as a solution to the current situation, because, unfortunately, there is such an excess of foreign currency on the market that we will not be able to reduce budget expenditures so much in conditions when we have an increased need for money in order to stabilize the exchange rate with this additional demand,” Maxim Reshetnikov, head of the ministry, said at the RSPP congress .
According to the head of the Ministry of Economic Development, the implementation of such a proposal would rather worsen the situation in the economy. „Within the framework that my colleagues are now proposing, I’m afraid we will rather worsen the situation, because in the face of a lack of demand, a reduction in budget spending will only have an even more negative impact on the economy,” the minister said.
It was not officially reported on the consideration of the proposals of the Ministry of Finance in the government during the week from 4 to 10 July.
According to Interfax sources, the issue was discussed on July 5 at a meeting of the presidium of the government commission on improving the stability of the Russian economy under sanctions, chaired by Prime Minister Mikhail Mishustin. As a result of the meeting, the Ministry of Finance was instructed to submit to the government by July 13 „proposals for adjusting the „budget rules”, including the formula for calculating and determining the volumes of the revenue and expenditure parts of the federal budget, as well as the estimated amount of expenditures for foreign exchange interventions.”
Last week, the Ministry of Finance announced that it had submitted proposals to the government on new parameters of the budget rule, without disclosing their details. Siluanov spoke about the proposal to include a new parameter in the rules – the volume of production (as well as export) of hydrocarbons. “If earlier there was a cut-off price as a condition for the formation of oil and gas revenues, now, in addition to the price of oil, the volumes of oil and gas supplies are important. We have made the dependence of budget revenues not only on price, but also on various options for the volume of production and export of hydrocarbons. And the average the value, which, we believe, will be in the non-risk zone for the budget, is proposed to be taken to calculate the budget rule. This will be the first innovation,” he explained.