Rising Oil Prices Put Russian Budget in the Black

By OGE Editor, May 11, 2018

Russia expects to post a budget surplus this year for the first time since 2011. According to a Ministry of Finance report, Russia's oil and gas revenues are expected to jump fivefold compared to what was projected in the 2018 budget; all because of rising oil prices.

Oil and gas exports account for around 40 percent of Russia’s federal budget revenues.

Russia’s revenues from oil and gas sales are now expected at US$44.4 billion (2.74 trillion Russian rubles) for 2018, up from US$8.5 billion (527.6 billion rubles), according to a budget  amendment issued by the Ministry of Finance.

Due to the unexpectedly high oil prices, Russia is currently on track to book a first budget surplus  since 2011 , at 0.45 percent of gross domestic product (GDP), compared to previous expectations for a 1.3 percent of GDP deficit. The previous forecasts, however, were based on assumptions that the price of Urals crude blend would average around $40 a barrel. Between January and April, the price of  Urals has averaged $66.15.

The additional oil revenues that Russia has earned above the Urals price assumption of $40 a barrel will be allocated to reserves instead of to spending, the TASS news agency reports.

Analysts commenting on the proposed budget amendment suggested that Russia will likely have an even greater suplus by yearend because its expenditures are based on original budget figures.

Source: Tsvetana Paraskova for Oilprice.com