Finance Ministry shows no urgency to reduce oil price to $60 per barrel.
Fresh Take:
The economic playbook for Russia ain't looking too hot, buddy. With experts predicting the Ministry of Finance slashing the oil barrel price cap from $60 to $50, it's gonna put a decent squeeze on the economy. This move would lower inflation, nudging the GDP down by around 1%. Folks are hailing it as a positive signal, showing that the Ministry's on the ball, navigating the tricky waters of a collapsing oil price market.
Currently, the Urals oil price hovers below $58, while the Economic Development Ministry had forecasted a mere $56 and $48.8 for 2025 in the base and conservative scenarios, respectively.
Siluanov, the Finance Minister, recently mentioned that sticking to the budget parameters set for the following three years is crucial, emphasizing national goals and social programs for 2030. He's expecting this turbulent year to be dealt with without any extra tax measures. However, businesses might not be so keen on these tax decisions, so Siluanov's promising to hold off on introducing them until after a joint discussion and the start of the financial year.
It's all about sustaining Russia's budget as oil prices keep plummeting, my friend. Global factors like tariff wars and energy demand risks have played their part in the downturn, while a robust ruble affects oil revenues in local currency. The International Energy Agency predicts a slight rise in global oil demand in 2025, but it's not translating into higher Russian oil prices, which are battling supply-demand and geopolitical headwinds.
In the past, the budget rule had allocated excess oil revenue to the National Wellbeing Fund when prices surpassed $60 per barrel, but with prices plunging, the government has had to tap into these reserves to make up for the budget gaps, raising concerns about their depletion: a dark cloud hanging over Russia's economic future.
Stay tuned to our Telegram channel, @expert_mag, for more updates on this rollercoaster ride of an economy!
- The Ministry of Finance's proposed move to reduce the oil barrel price cap to $50 from $60 may add pressure to Russia's already struggling economy, potentially causing a 1% decrease in GDP, as predicted by experts.
- Despite the economic challenges, Siluanov, the Finance Minister, insists on maintaining the budget parameters set for the next three years, emphasizing their importance for national goals and social programs in 2030.
- Businesses in the energy and finance industries might find Siluanov's tax decisions controversial, as he has promised to delay their implementation until after a joint discussion and the start of the financial year.
- As global factors like tariff wars and energy demand risks contribute to the downturn, the International Energy Agency predicts a slight rise in global oil demand in 2025, but this increase is not translating into higher Russian oil prices, which are battling supply-demand and geopolitical headwinds.
- The government's reliance on the National Wellbeing Fund reserves to make up for budget gaps, due to falling oil prices, has raised concerns about their depletion, casting a shadow over Russia's economic future.
