VEB: Russian budget to lose 2 tln rbl in 2016 if oil at $35/bbl

MOSCOW, Mar 9 (PRIME) -- The Russian budget will lose up to 2 trillion rubles in 2016 if the average annual oil price remains at U.S. $35 per barrel, state-owned Vnesheconombank (VEB) said in its macroeconomic forecast Wednesday.

“A reduction of oil prices to $35 per barrel in 2016 will lower the federal budget revenue by almost 2 trillion rubles compared to a level encompassed by the federal budget law,” VEB said.

VEB estimated the budget deficit at 4.6% of gross domestic product (GDP), which corresponds with the Economic Development Ministry’s estimate.

The current budget law is based on the average annual oil price of $50 per barrel, but the Economic Development Ministry plans to revise this forecast in April. If the average annual oil price remains at $40 per barrel, the budget loss will be at 1.1–1.2 trillion rubles, VEB said.

“But even in this case the federal budget deficit will exceed the target and will amount to 3.5% of GDP,” the bank’s experts said.

With oil prices recovering to $52–55 per barrel in 2017–2018, the federal budget deficit will decrease to 2% of GDP and 1.2% of GDP, respectively, VEB said. If the oil price stands at $41–42 per barrel in this period, the deficit will amount to 4% of GDP and 3.4% of GDP, respectively, the bank’s experts said.

(73.1854 rubles – U.S. $1)

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