UPDATE: Russia to cut 2017–2019 budget deficit by 1 pp of GDP–min

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MOSCOW, May 26 (PRIME) -- Russia’s Finance Ministry keeps a key task to reduce the budget deficit by 1 percentage point of gross domestic product (GDP) annually over the next three years, Finance Minister Anton Siluanov told reporters Thursday.

A deficit of over 3% of GDP raises questions at investors on how the government will finance it, he said. At present, the deficit is financed with reserves accumulated over previous years, but this resource will deplete at some point, making it necessary to boost borrowings, which will in turn lead to growth of interest expenditures, Siluanov said.

“That’s why the issue of budget balance, reducing the budget deficit – and we set a goal to reduce the budget deficit by 1 percentage point per year – will be a key issue during a discussion of the budget policy for the upcoming period,” he said.

The Finance Ministry has already started preparing the country’s budget for 2017, Siluanov said.

“I would like to inform colleagues that we have already started preparing the budget for 2017. The first meeting of the budget commission, where the maximum size of budget allocations will be considered, will take place on June 27. That’s why we already have to prepare proposals for a draft budget for next years,” he said.

A deadline for submission of the 2017–2019 budget to the State Duma, the parliament’s lower house, has been recently delayed until November 1 from October 1 set previously.

Spending of the Reserve Fund in 2016 will likely exceed around 2.1 trillion rubles set in the budget, but the ministry will try to minimize it, Siluanov also said.

“We will do our best to minimize spending of the reserves as we understand that we need a safety cushion for upcoming years and have no intention to spend it,” he said.

With an annual average oil price of U.S. $40 per barrel the budget deficit will amount to around 3.3% of GDP this year, he also said.

(65.8949 rubles – U.S. $1)

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