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Russia has sufficient reserves to live through falling oil prices — finance minister

October 15, 2014, 12:55 UTC+3 MOSCOW
The Russian government intends to use several instruments to meet all its obligations, Finance Minister Anton Siluanov says
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Russian Finance Minister Anton Siluanov

Russian Finance Minister Anton Siluanov

© ITAR-TASS/Anton Novoderezhkin

MOSCOW, October 15. /TASS/. The Russian government has sufficient budget reserves to live through 2015 amid falling oil prices and depreciating national currency, Finance Minister Anton Siluanov said on Wednesday.

“We created the Reserve Fund specifically for this purpose and kept accumulating foreign exchange reserves,” the minister said.

Russia’s Reserve Fund was set up to accrue surplus oil revenues and use them to cushion the budget against a plunge in world oil prices. The Russian government intends to use several instruments to meet all its obligations, the minister said.

“First, we’ll bring the budget into compliance with new realities. We’re working as part of the commission for budget efficiency and optimizing programs to adjust the budget to the economy’s real possibilities,” Siluanov said. “Second, the budget has a reserve which will be used. Third, we’ll use the Reserve Fund,” the minister said, adding that Russia would calmly pass through the year 2015.

Russia’s finance minister said earlier on Wednesday the ministry would start auctions during this month to place foreign currency funds on banks’ deposits to mitigate the ruble exchange rate amid failing world oil prices.

Russian companies and banks need foreign exchange to repay their foreign liabilities by the end of this year amid US and EU sectoral sanctions barring them from raising medium and long-term financing on western markets.

“We have taken a decision in the Finance Ministry to hold foreign exchange auctions and we’ll hold such auctions soon,” Siluanov said. “Quite sufficient foreign exchange funds have been accumulated on the Treasury’s accounts,” the minister said, adding several billion US dollars could be offered to banks at auctions.

The Russian finance minister said the country’s balance of payments was responding both to changes in the ruble exchange rate and falling oil prices. “A fall in oil prices causes a decrease in revenues while the exchange rate’s response (to falling oil prices) gives an increase in revenues,” the minister said.

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