The Russian Ministry of Finance is proposing a shift in how the budget rule is calculated for 2024. Rather than tying the rule to oil and gas revenues alone, officials suggest using the base price of commodities as the reference point. Finance Minister Anton Siluanov announced this approach during a meeting with the government, indicating that adjustments to the budget rule have already been made and are under consideration. The exchange between the ministry and the government signals a potential normalization of the rule’s parameters after a period of volatility in energy-related income. The minister reiterated the reference oil price used in the current framework, noting that the baseline is set at 60 dollars per barrel, a figure that anchors the calculation of fiscal limits and spending envelopes.
In late September, the government faced expectations of a reduction in oil production within the Russian Federation. Deputy Prime Minister Alexander Novak provided projections suggesting that production could fall to 527 million tons in 2023, with an overall output of 535 million tons for the year, representing a roughly two percent rise from 2021. He attributed the shift to decisions made within OPEC+ and the broader dynamics of the global oil market, which have influenced Russia’s export capacity and fiscal planning. The evolving production outlook underscores the challenge of maintaining stable revenue streams in the face of external policy actions and market fluctuations. Novak’s analysis implies that the administration is weighing how these production trajectories interact with fiscal rules designed to cushion the economy from oil price shocks.
This context follows prior forecasts from major financial institutions that anticipated higher oil prices, with some market commentators noting a potential rise to about 120 dollars per barrel under certain scenarios. The dialogue between officials and markets highlights an ongoing effort to calibrate fiscal policy to a world where commodity prices and production levels can deviate from expectations, potentially affecting government spending, social programs, and investment in strategic sectors. The focus remains on achieving a balance between prudent revenue assumptions and flexible spending rules that can adapt to changing energy revenues, while preserving long-term fiscal sustainability and macroeconomic stability in Russia.