UPDATE 1-Russian budget banks on firm oil prices
* Budget break-even oil price to stay above $100 * Revenue and spending projections cut by $10 billion in 2013 * Oil price seen at $97 in 2013, deficit at 1.5 pct of GDP By Darya Korsunskaya and Jason Bush MOSCOW, July 9 (Reuters) - Russia's federal budget will only balance if oil prices to hold above $100 per barrel until at least 2015, according to a draft three-year budget seen by Reuters on Monday. The budget arithmetic implies that despite efforts to rein back spending, public finances will remain vulnerable to a fall in international energy prices - the Achilles' heel of the commodity-dependent economy. The budget plan incorporates generous promises made by Vladimir Putin, before his election in March as president, to increase public sector pay and social benefits, requiring steep cutbacks in investments in infrastructure and education. Both revenue and expenditure projections have been cut by around $10 billion in 2013, compared with the previous budget plan. Nevertheless, the budget's break-even oil price will decline only gradually, to $105.4 per barrel in 2015, down from $116.2 per barrel in 2012. The budget plan makes no changes to the government's previous oil price forecasts, on which revenues are calculated. It assumes an oil price of $97 per barrel in 2013, $101 per barrel in 2014, and $104 per barrel in 2015. At these oil prices, Russia expects a deficit of 1.5 percent of gross domestic product in 2013, falling to 0.1 percent of GDP in 2015. Overall public debt would reach a modest 14.4 percent of GDP by 2015. Global oil price are notoriously volatile and the budget figures imply that a new fiscal rule, designed to base budget planning on the long-run average oil price over preceding years, will not be fully enforced until 2015. "The lack of clarity regarding the budget rule and the multiple redrafting of the plan for expenditures are undermining the Cabinet's overall credibility," Alfa Bank analysts said in a note on Monday. Alexander Morozov, chief Russia economist at HSBC, noted that the budget draft is the first time since 1998 that Russia has revised down spending plans. "From the fiscal stability and public debt perspective it is definitely good news that positively surprised us," he said in a note. However, Morozov warned that the plans to keep a tight grip on spending would be hard to implement, and would only moderately reduce the dependence of public finances on high oil prices even if fully adopted. London-based consultancy Capital Economics also expressed fears that the new budget draft was insufficiently tough, leaving Russia exposed to a sharp fall in the oil price. "We think much more needs to be done in order for the Russian public finances to return to a sustainable path," analyst Liza Ermolenko wrote in a note. DRAFT THREE-YEAR BUDGET 2013-2015 (in trillion roubles unless stated) 2012 2013 2014 2015 Break-even oil price ($) 116.2 113.9 106.0 105.4 Average oil price ($) 115 97 101 104 Nominal GDP 60.6 65.8 73.4 81.5 Revenues 12.7 12.4 13.6 15.2 Expenditures 12.7 13.4 14.1 15.3 Deficit (% GDP) 0.1 1.5 0.6 0.11 Non-oil deficit (% GDP) 10.6 10.1 8.9 8.6
- Gaza toll passes 100; Israel to counter rockets 'with all power' |
- Mexican train derails, stranding 1,300 migrants headed toward U.S.
- Texas mass murder suspect collapses in court as crime recounted
- Ukraine says rebels will pay as missiles kill 23 soldiers |
- British 'Harry Potter' actor David Legeno found dead in U.S. park