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Putin signs law on new budget rule

July 31, 2017, 17:13 UTC+3 MOSCOW

The new budget rule is expected to come into effect in 2019

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© Mikhail Klimentyev/Russian Presidential Press and Information Office/TASS

MOSCOW, July 31. /TASS/. Russian President Vladimir Putin signed a federal law on a new budget rule [mechanism of Russia’s budget forming, determining the maximum level of spending on the basis of oil prices - TASS] aimed to reduce the dependency of the federal budget on oil and gas revenues. The document approved by the State Duma on July 19 and passed by the Federation Council on July 25 was posted on the official web portal of legal information.

According to the new rule, parameters of the national federal budget, expenditures in the first place, will be calculated on the base of 40$ per barrel price of Urals crude oil measured in 2017 prices, which will be annually adjusted by 2% from 2018. Only oil and gas revenues calculated from the base oil price, base export gas price, projected currency exchange rate, the amount of non-oil and gas revenues and sovereign debt service expenses may be allocated to federal budget expenditures.

The law stipulates consolidation of the National Wealth Fund and the Reserve Fund. Consolidation is anticipated in condition when the Reserve Fund is expected to deplete against dramatically declined oil prices over the past two years.

The new budget rule is expected to come into effect in full scope in 2019, with a transitional period provided in 2018.

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