GORKI, January 15. /TASS/. The government has to substantially reduce costs, scrap a series of projects and perform staff downsizing, Russian Prime Minister Dmitry Medvedev said on Friday at the meeting on the 2016 federal budget.

"We will look at expenses that should be slashed and decide what projects we will have to abandon or postpone. I tasked all ministries and departments to make such proposals — on reduction of costs and downsizing," the prime minister said.

The Prime Minister urges to mobilize budget revenues, particularly in terms of privatization and receivables reduction, and to adjust expenditures to meet expected revenues "to ensure delivery of social commitments and finance protected items even in such a challenging budget situation."

Dramatic movement of oil prices creates serious risks for budget performance

According to the prime minister, dramatic movement of oil prices creates serious risks for the budget performance.

Current version of the 2016 year budget provides for the average annual oil price of $50 a barrel, the Prime Minister said. "Dramatic movement of oil prices we see last weeks, especially in recent days, creates serious risks for the budget performance," the prime minister said. It is not ruled out "problems will remain and further collapse of oil prices is possible," Medvedev added.

Nevertheless, the government should be ready for any developments on oil market and identify the most realistic range of oil prices, he said.

"We should be ready for any development of the situation," the prime minister said. First of all, there is a need to determine the most realistic forecast in respect of oil prices, he added. "This is a very challenging point. Clearly a certain range is most likely meant and not a specific figure, and the former should be made as narrow as possible," Medvedev said.