BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/16
The finance ministry has compiled a revised version of the budget that assumes an average oil price of $40. The deficit would be squeezed to around 3 % of GDP by e.g. spending cuts and increasing income from privatisation sales. Such measures, however, now seem to be off the table at least until next autumn. Some extra income will come from the recent amendment requiring state-owned enterprises to give at least half of their last year’s profits to the state. The move is expected to bring 100 billion rubles of additional budget revenue this year.
The current plan is to cover most of the federal budget deficit with money from the Reserve Fund, which held 3.4 trillion rubles ($50 billion, 4% of GDP) at the end of March. Russia also has the National Welfare Fund, which currently stands at around 5 trillion rubles (about two-thirds is in the form of highly liquid assets).
Russia’s government debt corresponds to about 14 % of GDP. This year the state has issued roughly 250 billion rubles in domestic bonds. Issuance of bonds abroad has been under consideration, but there has been difficulties in finding banks willing to arrange issues due to economic sanctions.