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SOCHI, February 27. /TASS/. The economic bloc of the Russian government expects the new fiscal rule to be adopted in the spring session of the State Duma, lower house of parliament, and the cut-off price will remain at $40 per barrel, Finance Minister Anton Siluanov told reporters.
"The intention of the economic unit is that it is necessary to submit amendments to the Budget code regarding the fiscal rule in spring session. The cut-off price should be $40 per barrel in nominal terms," the Minister said.
He stressed that it is necessary to agree on the new fiscal rule in 2017 in order to "give a definite signal" that fiscal policy will be built on the basis of this principle.
The fiscal or "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 decline in oil prices the fiscal rule did not work and the government decided to suspend its application.
But in November 2016, Russia’s Prime Minister Dmitry Medvedev said he finds it reasonable and necessary to form the new budget rule.