Oil price cap may widen Russia’s 2023 budget deficit, says Finance Minister

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Russia’s budget deficit could be wider than the planned 2 percent of GDP in 2023 as an oil price cap squeezes Russia’s export income, Finance Minister Anton Siluanov said. | Reuters

“ is significant to the extent that to those countries that have set the ceiling, there will be no supplies,” Siluanov said. “This means there will be other countries. Yes, logistics will increase. Discounts may change as a result.”

Should volumes shrink, Siluanov said Russia has two sources of additional funding: the National Wealth Fund , which accumulates state reserves, and loans. The government has borrowed heavily this quarter after several barren months following Moscow’s decision to send tens of thousands of troops into Ukraine, for what it calls a “special operation”. Russia now expects to use just over 2 trillion rubles from the NWF in 2022 as total spending exceeds 30 trillion rubles, more than the year’s initial plan.

“Since the start of the special military operation, the macroeconomic conditions have changed, inflation has risen and a large volume of resources has been required to support families,” Siluanov said. NWF spending in December could amount to 1.5 trillion rubles. As of Dec. 1, liquid assets in the NWF totalled 7.6 trillion roubles, or 5.7 percent of Russia’s GDP.

 

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