Russia introduces economic cycle ago forecast and prepares for drop in world oil prices to $60 in 2013
Baku, Fineko/abc.az. Russia has become the first exporter that responded to the Morgan Stanley forecast on completion of the cycle of high commodity prices and the collapse of the bubble in the world oil market.
Deputy Finance Minister Alexei Lavrov of Russia says that the Russian Ministry of Finance will develop already in August a forecast of Russias federal budget given the fall in world oil prices to $60 per barrel.
The Russian MoF is conducting "risk-testing" of the country’s budget in case of such a fall of world oil prices.
At the same time Lavrov pointed out that testing and the relevant forecast is rather a prediction of behavioral model in case of a sharp decline in oil prices, which may be scarcely probable, but this question should be thought from angle of risk assessment.
In parallel, Russia introduces limits on public spending for 2013-14, by reducing them. Sequestration (or "restructuring" as the Russian Finance Ministry prefers to say) will cover costs on the pension system, the state arms program, grants for the economy, government contracts.
De facto, in the face of the oil crisis, the Dmitry Medvedevs government has initiated a review of campaign promises of President Vladimir Putin.
Nothing other was expected after the presidential election, but the beginning of the process was put by Putin himself, who stressed that the country’s budget should be developed not in accord with the oil price forecast, but in compliance with its average for the last 5-10 years. In fact, Russia that has got stuck in export of raw materials introduces budget forecasting on principle "economic cycle ago”.
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