icon bookmark-bicon bookmarkicon cameraicon checkicon chevron downicon chevron lefticon chevron righticon chevron upicon closeicon v-compressicon downloadicon editicon v-expandicon fbicon fileicon filtericon flag ruicon full chevron downicon full chevron lefticon full chevron righticon full chevron upicon gpicon insicon mailicon moveicon-musicicon mutedicon nomutedicon okicon v-pauseicon v-playicon searchicon shareicon sign inicon sign upicon stepbackicon stepforicon swipe downicon tagicon tagsicon tgicon trashicon twicon vkicon yticon wticon fm

Russia considers cutting government borrowing as oil prices rally

Russia considers cutting government borrowing as oil prices rally
Russia could end up borrowing US$6.8 billion (500 billion Russian rubles) less than planned this year as rising oil prices help its key oil revenues to rise.

The rally in oil prices, which have risen by around 30 percent this year, also coincides with Russia’s economy emerging from the slump during the pandemic.

Last year, Russia’s economy was suffering the consequences of the oil price crash it helped create with the temporary rift with its OPEC+ partner Saudi Arabia in March 2020. The Russian ruble crashed, and Russia’s oil income shrank as a result of the plunge in oil prices during the pandemic.  

In March 2020, Russian Finance Minister Anton Siluanov warned that revenues from oil and gas would be US$40 billion (3 trillion rubles) lower than planned due to the tumbling oil prices. Russia’s economy is not going as well as one would have hoped, the finance minister admitted back then, saying that the oil price factor alone was set to reduce the country’s budget income by nearly US$40 billion compared to earlier estimates.

Also on rt.com Russia expects oil between $45 and $80 by 2035

The oil price crash, along with the coronavirus-driven global recession, will result in Russia’s economy shrinking in 2020 by six percent, or by the most in 11 years, the World Bank said in its economic report on Russia in August 2020.

Russia was also said to be considering whether to adopt a kind of state oil hedging program, similar to Mexico’s oil hedge, to protect government revenues from oil price crashes in the future.  

This year, the higher oil prices are pushing up Russia’s oil revenues, its key export income, and the government is discussing lower debt issues year, according to Bloomberg’s sources.

READ MORE: Russian economy may recover to pre-pandemic levels by year end, says Central Bank

Officials are considering cutting the borrowing to US$43 billion (3.2 trillion rubles) from US$50 billion (3.7 trillion rubles), according to the sources, one of whom even said that the cut to borrowing in 2021 could double to US$13.5 billion (1 trillion rubles).   

This article was originally published on Oilprice.com

Dear readers and commenters,

We have implemented a new engine for our comment section. We hope the transition goes smoothly for all of you. Unfortunately, the comments made before the change have been lost due to a technical problem. We are working on restoring them, and hoping to see you fill up the comment section with new ones. You should still be able to log in to comment using your social-media profiles, but if you signed up under an RT profile before, you are invited to create a new profile with the new commenting system.

Sorry for the inconvenience, and looking forward to your future comments,

RT Team.

Podcasts