January 26, 2017 / 8:05 AM / in 2 years

FACTBOX-Russia's new budget rule to protect economy from oil swings

MOSCOW, Jan 26 (Reuters) - Russia's monetary and fiscal
authorities will start buying foreign currency in February, in
line with a budget rule designed to shield the economy from
swings in oil prices and protect the country's fiscal reserves.
    The move will keep the rouble weaker as the central bank
will buy dollars on the domestic currency market on behalf of
the finance ministry.
    According to the rule, Russia will use energy revenues
earned when Urals oil prices URL-E are higher than the $40 per
barrel level used in this year's budget to reduce the budget
deficit, rather than additional spending. 
    If Urals averages $55 per barrel or more, energy revenues
would be sufficient to allow Russia to build up its fiscal
reserves since Russia also plans to cover this year's budget
deficit by ramping up borrowing.
    The central bank has pledged to carry out its
foreign-currency purchases "evenly", while the finance ministry
has said it will disclose its monthly plans for forex buying on
one of the first three days of every month. 
 
    Below are finance ministry calculations contained in
documents seen by Reuters on how the budget rule could affect
the rouble exchange rate, budget deficit and fiscal reserves at
different Urals prices.
    
    
 Average     Rouble      Extra       Fiscal      Budget deficit
 Urals oil   rate vs     revenues,   funds       (-)/surplus
 price       dollar      in blns of  change, in  (+), in pct of
                         roubles     blns of     GDP
                                     roubles     
 $30         79.34       -1,218      -3,038      -4.5
 $35         74.13       -551        -2,372      -3.7
 $40         69.42       +23         -1,797      -3.1
 $45         67.82       +733        -1,087      -2.2
 $50         66.32       +1,412      -408        -1.5
 $55         64.90       +2,061      +241        -0.7
 $60         63.57       +2,691      +871        -0.1
 $65         62.32       +3,296      +1,475      +0.6
 $70         61.07       +3,868      +2,048      +1.2
 
 (Reporting by Darya Korsunskaya; Writing by Andrey Ostroukh and
Alexander Winning; Editing by Andrew Osborn)
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