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 Anton Siluanov warned the country's budget would only balance at an
oil price of $82 per barrel, well in excess of the $50 per barrel
assumption used for this year's calculations, let alone the $30 per
barrel near which oil is currently trading. Some forecasters have
predicted crude, Russia's major export and main source of revenues,
could fall to $20 per barrel or lower.
Although he said oil prices could start to recover in the second
half of the year, Siluanov told the annual Gaidar Forum in Moscow
that the 2016 budget should be revised according to a lower assumed
average oil price of $40 per barrel.
"Our task is to adapt our budget to the new realities," Siluanov
said. "Our budget will be balanced when the price is $82 per barrel
so there are still a lot of decisions to be made when it comes to
budget policy."
Speaking at the same conference, Prime Minister Dmitry Medvedev also
said the country needed to steel itself for tough times. "One needs
to prepare for the worst scenario," he said.
Medvedev said the budget would need to be revised if oil prices fell
further. But he also said the situation was manageable given
Russia's existing cash reserves.
Russia's central bank outlined a "risk scenario" last month under
which oil prices would stay at around $35 for three years.
Siluanov said last year's budget deficit was around 2.6 percent of
gross domestic product, slightly lower than forecast, but warned
that did not mean Russia had adapted to an era of cheap oil.
This year's budget envisages a deficit of 3 percent of GDP, assuming
the oil price averages $50 per barrel.
Siluanov said the first steps toward adjusting spending had been
taken, after the government ordered ministries to find 10 percent
cuts in "non-protected items" of expenditure.
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Officials earlier told Reuters that the planned cuts had been
approved by the government last month, but would exclude areas such
as public sector pay and pensions.
The finance ministry, which typically emphasizes the need for fiscal
caution, is likely to face resistance to spending cuts from other
government departments as it did last year.
Economy Minister Alexei Ulyukayev also warned that Russia needed to
brace for a long period of low commodity prices.
"I am convinced that the period of low commodity prices will be
protracted," he told the forum.
"One needs to fear that there will be (an oil price) of $20 or $15.
By the logic of markets the bigger the fall today, the larger the
rebound tomorrow, and this isn't the biggest risk.
"The biggest risk is that there will be low prices for a long time
-- that is for years, for decades," Ulyukayev said.
(Reporting by Darya Korsunskaya, Oksana Kobzeva and Alexander
Winning; Writing by Jason Bush; Editing by Andrew Osborn and
Catherine Evans)
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