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Sunday, March 11, 2018

“The Ministry of Finance: the exchange rate of the ruble will support at low oil prices “

The renewed support of the ruble and low oil prices have offered the Ministry of Finance under the new fiscal rules. The new mechanism is expected to start after 2018, the same parts will be discussed in the autumn of the current.

The initiative includes the allocation of part of oil and gas revenues to the reserve Fund or national welfare Fund when oil prices exceed the level of 50 dollars per barrel.

“When oil prices us $ 40-50 per barrel, the budget must make savings and the government should start buying foreign assets. Since these purchases are financed by budget savings, it will not take inflationary impact unlike direct purchases of foreign currency by Bank of Russia”, — quote “Vedomosti” the words of the Deputy head of the Ministry of Finance Maxim Oreshkin.

At lower oil prices below this level, the currency must be sold, protecting the ruble from temporary shocks. According to him, the scheme will provide “a stable fiscal and tax design in the medium and long term”, as well as minimize the dependence of the ruble on the oil market.

Oreshkin also noted that, before 2008, the Bank of Russia tried to limit the strengthening of the national currency through intervention in the market, and the Ministry of Finance to save money in the stabilization Fund. However, because of the intervention exceeded the savings, the real exchange rate strengthened, and the competitiveness of business decreased on the background of increasing wages ahead of productivity growth, said the Deputy head of the Ministry of Finance.

A new initiative reiterates fiscal rule, which was introduced in 2004. Then the threshold of deductions to the stabilization Fund amounted to $ 20 per barrel of oil, two years later the bar has been raised to 27 dollars, remind “sheets”.


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