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MOSCOW, November 24. /TASS/. The new budget rule should rely on mid-term crude oil price within $50 per barrel, Russia’s Finance Minister Anton Siluanov said on Tuesday.
"We assume that we need a new budget rule relying on crude price of $50 per barrel maximum, as we see that this price is likely to stay for mid-term," the Minister said.
He added that this year global economic growth will total around 2.9% though forecasts are constantly being adjusted for the worse.
"That’s why we simply cannot speak about any improvements regarding demand for oil and respectively price dynamics," Siluanov said.
Earlier Russia’s Economic Development Minister Alexey Ulyukayev said it’s not reasonable to introduce new budget rule amid current environment.
On September 7, Siluanov said that the budget rule will be reapplied after 2016. According to the Finance Minister, a clear and transparent setting of parameters is the best practice of budgeting for all participants of the process as well as for citizens and investors.
The budget rule determines the maximum level of budget expenditures on the basis of oil prices. It is aimed at reducing dependence of Russia’s budget on market revenues. The essence of the rule is to transfer additional oil and gas revenues, which are formed if the actual price of oil exceeds the target price, to the Reserve Fund.
In case the Reserve Fund exceeds 7% of GDP, additional oil and gas revenues should be directed to the National Wealth Fund.
The budget rule also limits budget deficit to 1% of GDP. If oil prices decrease, the settlement price is determined as the average over the past 3 years.