Russia Faces Budget Deficit Of 0.9% On Current Oil Prices

The Minister of Finance of the Russian Federation, Anton Siluanov, said yesterday that the country’s budget deficit could go as high as 0.9% of gross domestic product (GDP) in 2020 on current oil prices.

Russia’s economy saw major harm due to the declining global oil prices, as well as the outbreak of the coronavirus. Siluanov said the epidemic caused more damage to the country’s economy as it made difficulties in transportation, trade, and tourism.

On Saturday, Moscow said school attendance will be optional starting Monday, in efforts to prevent the epidemic from spreading. Also, the country's Ministry of Education advised all regions to switch to remote learning, if considered necessary. There are still no deaths caused by the virus in Russia, however, some doctors have been questioning these statistics.

According to the initial estimates, Russia anticipated a budget surplus of 0.8% of GDP for this year, but because of current oil and gas prices budget revenues are expected to plummet by nearly 2 trillion roubles ($27.7 billion) compared with earlier estimates, the minister said.

The country has a sovereign wealth fund called the National Wealth Fund (NWF), controlled by the Ministry of Finance, which is composed of oil revenues generated in earlier years. The fund was founded in 2008 and is a part of the country's sovereign reserves, holding 8.2 trillion roubles ($113.5 billion), translating to 7.3% of Russia’s GDP, as of March 1.

Russia plans to use 600 billion roubles from the fund this year. It will also proceed with the previous plan of using the fund’s money to buy a 50% + 1 share in Sberbank, the largest lender in Russia.

Siluanov also said that the Ministry of Finance trusts oil companies to contribute to the fund this year by investing 500 billion roubles.