JERICHO, November 11. /TASS/. Russia’s Prime Minister Dmitry Medvedev finds it reasonable and necessary to form the new budget rule. When summing up the results of his visit to Israel and Palestine Medvedev told reporters that the cabinet will define the new budget rule in the coming months.
"We find it reasonable to form this rule and it looks like we should do it. The content of the rule depends on many reasons. In particular, it depends on price for oil, gas and other commodities, on budget revenues and our strategic priorities. I think in the coming months we will decide how to do it," Medvedev said.
He stressed that although the budget rule faced a lot of criticism working under this rule is better than the situation when budget revenues are distributed without this rule.
Budget rule is the mechanism of formation of Russia’s budget. It determines the maximum level of spending on the basis of oil prices. The aim of the rule is to make the budget less dependent on market revenues. The essence of the rule is that additional revenues that are raised from sale of oil and gas should be transferred to the Reserve Fund. Such additional revenues emerge in case when the actual price of oil exceeds the price in the forecast.
After a sharp drop in oil prices in the past year the budget rule actually did not work and its suspension was fixed in the 2016 budget.
Finance Minister Anton Siluanov said earlier that the development of a new budget rule and its approval is the key task of the Finance Ministry in the near future. The Finance Ministry plans to introduce a new budget rule from 2020. This rule is expected to reduce the effect of volatility of commodity markets on the economy of Russia.