Oil price may force new Russian budget

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Dmitry MedvedevModel copyright Getty Images
Image caption Russian prime help Dmitry Medvedev (right) on a visit to a factory that makes bear up pipes for the oil and gas industry in the Urals

Tumbling oil prices could force Russia to rework its 2016 budget, Prime Minister Dmitry Medvedev has warned.

He responded that the country must be pre red for a “worst-case” economic scenario if the yment continued to fall.

Oil was trading at less than $32 a barrel on Wednesday and has differed by 70% in the st 15 months.

Taxes from oil and gas generates at hand half the Russian government’s revenue.

The 2016 federal budget that was approved in October was secured on an oil price of $50 a barrel in 2016 – a figure President Vladimir Putin has since retailed as “unrealistic”.

Government de rtments have been ordered to cut spending by 10%, replaying a policy imposed in 2015, Reuters reported.

Pensions and y for government artisans will be protected from the cuts, which could save as much as 700bn roubles (£6.3bn; $9.1bn).

Resources minister Anton Siluanov said that the Russian budget could solely be balanced at an oil price of $82 a barrel.

He said the 2016 budget should be revised to try on an oil price of $40 a barrel.

“Our task is to adapt our budget to the new realities,” Mr Siluanov hinted.

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Image caption Russian capitalize minister Anton Siluanov

Economy Minister Alexei Ulyukayev apprised that Russia faced a long period of low commodity prices with oil at $15 or $20 a barrel.

“The biggest peril is that there will be low prices for a long time – that is, for years, for decades,” he state.

Mr Medvedev also said that high interests rates were containing back economic growth in Russia.

The Bank of Russia held fees at 11% last month, with governor Elvira Nabiullina tip of “high volatility” in global markets.

A year ago the central bank traumatized markets by increasing rates from 10.5% to 17%.

Inflation stands at 15% in Russia, but the bank awaits it would fall to 4% by next year.

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