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Russia may cut budget spending if oil prices fall — Putin

October 14, 2014, 18:00 UTC+3
In the light of falling prices for Russia's traditional export commodities, budget spending can be revised
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Russian President Vladimir Putin

Russian President Vladimir Putin

© TASS/Alexei Nikolskiy

MOSCOW, October 14. /TASS/. Russia may cut budget spending if oil prices continue to fall, President Vladimir Putin said on Tuesday at a meeting of the Council for Human Rights.

Putin reminded that prices of energy products and the prices of some of Russia's other traditional commodities have fallen. He said there's a chance that budget spending will be cut.

Putin’s statement came in response to a request for additional financing. He said, however, that the budget is tight and balanced.

Russia's Reserve Fund to help in case oil price falls

First Deputy Finance Minister Tatiana Nesterenko said on Monday the Russian government might spend up to $37 billion from the country’s Reserve Fund in the next three years, if world oil prices continue to fall.

Russia’s Reserve Fund was set up to accumulate surplus revenues from oil exports to cushion the federal budget against a plunge in oil prices.

Finance Minister Anton Siluanov also said on Monday the Russian government might spend $12.5 billion (500 billion rubles) from the country’s Reserve Fund in 2015, if world oil prices and the national currency continued to fall.

“If the current situation continues into 2015, we’ll be forced to turn to the Reserve Fund to spend up to 500 billion rubles,” he said.

Russia’s finance minister said that otherwise the government would have to make a decision on further optimizing budget spending.

World oil prices are currently hovering at $87 per barrel while the national currency is trading at 40.3 rubles to the US dollar, above the projected level of 37.7 rubles to the dollar while the average world oil price estimate was $104 per barrel in 2014 and $100 per barrel in 2015-2017, the finance minister said.

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