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20 Oct, 2019 10:42

Golden shield: Russian bullion reserves will protect country against slump in oil prices

Golden shield: Russian bullion reserves will protect country against slump in oil prices

Russia can withstand a sharp drop in crude prices thanks to its sufficient gold holdings and the government’s efforts to reduce reliance on energy resources, Russian Finance Minister Anton Siluanov has said.

The Russian economy is still linked with crude production and refining, and thus the situation in the market can affect it, Siluanov stated in an interview with CNBC. While Moscow is satisfied with the current price of oil, possible market turmoil will not result in a “shock” to its budget.

“For this reason, the budget is based on budget rules that take into account an oil price of $42 a barrel. And regardless of how things work out with the oil price, we will be able to finance our obligations because we have accumulated sufficient gold reserves, more than seven percent of the GDP,” the minister explained.

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“Therefore, even if oil prices go to $30 barrel or $20 a barrel we will able to honor our own obligations for three years without any shocks or difficulties for our budget.”

Russia has been actively filling its coffers with gold, having added some 12 tons of the precious metal to its reserves in September. Russia’s total gold holdings currently amount to 72.1 million troy ounces (2,242.56 tons) and are worth around $108 billion, according to the latest data from the central bank. The country’s international reserves, which include foreign currency and other high liquid assets, exceeded $535 billion as of October 11.

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