SOCHI, September 30. /TASS/. Russia’s National Wealth Fund (NWF) will be used up to the level of 500 bln rubles ($7.8 bln) by the end of 2019, Finance Minister Anton Siluanov told reporters at the Sochi International Investment Forum 2016.
"The volume of reserves of the National Wealth Fund and the Reserve Fund will be only 500 billion rubles at the end of the three-year period. 500 billion rubles will remain of the National Wealth Fund (the Reserve Fund will be completely used up - TASS),"the minister said.
He added that the government should be careful when spending money on new projects from the NWF.
"In conditions, when we spend reserves, the NWF will be used to fill the "hole" in the budget as part of the three year period," Siluanov stressed.
Spending from Reserve fund
The official stressed that the forecast on spending from Russia's Reserve fund in 2016 remained unchanged at 2.1 trillion rubles ($33 bln).
Domestic borrowings
Russia’s internal borrowings will increase next year compared with 2016 to around 500 bln rubles ($7.8 bln).
"Domestic loans will stand at 500 bln rubles," he said.
Budget deficit in 2016 to amount to 3.5-3.7% of GDP
The Russian Finance Ministry did not include major privatization packages in the 2017 budget.
"Without major privatization packages in draft 2017 budget. We use the information from the Federal Property Management Agency. So far, it is not in the current budget drafts," Siluanov said.
The minister said that if the Federal Property Management Agency’s plans for privatization in 2017 changed, revenues from these deals would be aimed at reducing the volume of borrowing and spending of the Reserve Fund.
"As of today the (oil) price has slightly increased, particularly due to the decision on crude production freeze by OPEC countries," he said, adding that "the projected oil price will remain at $40 per barrel."
According to the minister, Russia's budget deficit in 2016 could reach 3.5-3.7% of GDP, depending on the structure of the deal with Bashneft.
"The deficit in 2016 will be 3.5-3.7% of GDP, depending on the structure of the deal with Bashneft," he said.
According to him, if the deal will be structured through Rosneft and Rosneftegaz - it will reduce the budget deficit. "If it is structured as a regular transaction not associated with Rosneft, it will be a source for financing the deficit," he added.
First Deputy Prime Minister Igor Shuvalov said earlier that Russian oil producer Bashneft may be privatized by 2016 year-end but no final decision has been made so far. "Everything is possible. We will report to the President and the decision will be taken after the final report with all pros and contras; no final decision has been made yet," Shuvalov said.
Privatization of Rosneft may be finalized by the end of this year, Minister of Economic Development Alexey Ulyukayev said earlier in September. Privatization process for Bashneft (50.08% in the capital held by the government) was postponed this August.
New budget rule
The official noted that the development of the new budget rule and its adoption were the key task of Russia’s Finance Ministry for the nearest future.
"A balanced budget is the basis, without which we won’t be able to speak about economic growth and a stable forecast. The development of the new budget rule and its adoption is the Finance Ministry’s key task for the nearest future," he said.
New system of pension contributions
Russia’s Finance Ministry will have to extend "the freeze" of the contribution part of pensions for one year and to test the new system of contributions.
"I think most likely we will [extend "the freeze" - TASS]," Siluanov said.
"We will present and introduce our proposal regarding the contribution part of pension. In case of the freeze, we will have a year to discuss the new contribution part of pension," he added.
The minister noted that the department needed a year to prepare all the necessary resolutions and to answer any questions on the new system. "I think that during this year and the next six months, we will do it. After that we can say that we end with the previous system of contributions and introduce the new system," Siluanov said.
No serious tax hike
Russia’s government has no plans to seriously change the country’s tax system.
"We’ll be working to increase earnings through enhancing administration though there are no plans to seriously change any bite of taxes compared with the current level," he said.
According to Siluanov, the main task in this respect is to improve tax collection. "We’ve already assumed a number of measures. This year the revenue authority has done a good job regarding collection, for example, the collection of alcohol excise duties has surged by 30%. The task for the next year is to enhance the administration of insurance and customs collection," the minister said.