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Russia’s Finance Ministry proposes 10% budget cuts, except defense spending

January 14, 2015, 11:12 UTC+3 MOSCOW

Russia’s Finance Minister Anton Siluanov said Russia’s budget in 2015 could lose 3 trillion rubles ($45.9 billion) if the oil price is $50 per barrel.

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© TASS/Artiom Geodakyan

MOSCOW, January 14. /TASS/. Russia’s Finance Ministry has proposed cutting 2015 budget expenditures by 10%, except ‘protected’ spending items, Finance Minister Anton Siluanov said on Wednesday.

“Although we introduced restrictions on expenditures for next year, this year we’ll propose to the State Duma [the lower house of Russia’s parliament] to cut all expenditures by 10%, except defense spending, on which a decision was made,” Siluanov told the Gaidar economic forum in Moscow.

The finance minister said, however, even this reduction “is not enough.”

The finance minister lashed out at economists who said that Russia’s reserves accumulated from surplus oil revenues should be spent quicker.

“This is also a policy: you can spend funds and then rely on a bit of luck and hope that something may help. But this is what does not happen,” the minister said.

“We must give up expenditures we cannot endure,” the finance minister said.

Russia’s budget for this year stipulates a 11.7% expenditure growth, he said.

“With the slowing economy, this looks simply absurd,” the minister said.

“Let’s increase expenditures but only by 5 and not 11.7% because we’ll simply be unable to endure more,” he said, adding this required a revision and cancellation of ineffective expenditures.

Infographics Oil prices over 30 years

Oil prices over 30 years

Year-average inflation-adjusted oil price. Infographics by TASS

Siluanov said Russia’s budget in 2015 could lose 3 trillion rubles ($45.9 billion) if the oil price is $50 per barrel.

“We believe that at the oil price of $50 per barrel, our loss in revenues will be around 3 trillion rubles,” Siluanov told the Gaidar Forum in Moscow.

The minister stressed that Russia needs to adjust to the current problem it is facing over attracting financing.

“The state cannot spend as much funds as it used to when the oil price was $100 per barrel,” Siluanov said.

“Otherwise we will waste our reserves and then we will borrow from the Central Bank, and this will lead to inflation,” he added.

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