Ministry of Finance of the Russian Federation
Ministry of Finance of the Russian Federation
07.07.2011

Statements of Deputy Head of the Government of the Russian Federation – Finance Minister of the Russian Federation A. Kudrin

 

Kudrin: Budget deficit at zero in 2015 with oil price at $100/bbl

MOSCOW, Jul 7 (PRIME) -- Russia’s federal budget deficit is expected at zero in 2015, if the world oil price amounts to about U.S. $100 per barrel, Deputy Prime Minister and Finance Minister Alexei Kudrin said Thursday after government session.

Kudrin also said he believed the budget deficit of over 3% of the country’s gross domestic product (GDP) to be critical for Russia’s economy. The size of the federal budget deficit is still important for the country’s economy, as the total budget revenue is expected to depend on the revenue gained from the oil and gas sectors within the coming years, Kudrin said. He added that the revenue from the oil and gas sectors is to account for 47% of the total budget revenue in 2011.

On Thursday, the Russian government approved revised parameters of the country’s federal budget for 2012–2014, under which the federal budget deficit is expected at 2.7% of GDP in 2012 and 2013, and at 2.3% of GDP in 2014. However, Russian Prime Minister Vladimir Putin said earlier on Thursday that the federal budget deficit could be below 2.7% of GDP in 2012.

Kudrin also said that a tax increase is better for the country’s economy than the widening of the budget deficit, although he admitted that lowering insurance premiums could toughen the tax burden for some sectors of Russia’s economy, including the financial sector, the mining and transportation industries, and retail.

The government has decided to start charging insurance premiums on annual personal income exceeding 512,000 rubles at a 10% rate for all companies and at 7% for all small-sized businesses operating in the production and social sectors from 2012. For annual salaries below 512,000 rubles, the insurance premiums rates are to be cut to 30% from the current 34% for all companies and to 20% from 26% for small-sized companies.

Kudrin also added that Russia’s economy had almost completely recovered from the global economic crisis. Russia’s economy is expected to grow to its pre-crisis level in 2011, with the potential to surpass the level in 2012, Kudrin said without providing the exact figures.

The country’s GDP rose 4.0% on the year in 2010, fell 7.9% on the year in 2009, and rose 5.6% in 2008, the Federal State Statistics Service said earlier.

 

Russia's Kudrin: $118/Bbl Average Oil Price Balances '11 Budget

MOSCOW (Dow Jones)--Russian Finance Minister Alexei Kudrin said Thursday the 2011 budget will be balanced only if Urals crude averages $118 a barrel.

The budget could be balanced in 2015--a goal of Prime Minister Vladimir Putin--if oil prices were to average $100 a barrel, Kudrin told reporters.

"If oil averages $100 in 2015, it will not be difficult to have a balanced budget. If it's at $90, it will be quite difficult," he said. "So if the question is will it be possible to have no budget deficit in 2015, the answer is yes, of course it's possible."

Meanwhile, in 2012 the budget will balance if oil averages $124.60 a barrel. The budget balances at $125.20 a barrel in 2013 and $125.70 a barrel in 2014, he said.

Kudrin said that 47% of Russia's budget expenditures are covered by oil and gas revenues this year, and that number will fall to 38% in 2014.

To help balance the budget amid a cut in corporate payroll tax receipts, Russians with annual incomes over 512,000 rubles ($18,300) may face an additional tax of up to 10% next year under rules approved by the government, Kudrin said.

Kudrin also said he sees chances of upgrades to Russia's debt from the international rating agencies.

 

Kudrin believes zero budget deficit by 2015 is realistic.

MOSCOW, July 7 (Itar-Tass) — Russian Finance Minister Alexei Kudrin believes it is realistic to cut the budget deficit to zero by 2015 on condition of having oil prices at the level of 100 dollars per barrel.

“Normal, stable work necessitates bringing the budget deficit to zero. This is a hard task if the price is 90 dollars, but if the price is 100 dollars, it will be not difficult to achieve a deficit-free budget,” Kudrin told reporters.

Kudrin explained that the year 2015 is taken as the point of reference because by this time Russia is expected to overcome the main consequences of the crisis. Under his forecasts “in 2015-2016 we will reach the pre-crisis level of budget revenues”. However as to the amount of GDP, Russia is expected to reach the parameters of the pre-crisis 2008 already by the end of the year.

“We expect that in 2011 GDP will make up 99.9 percent, in point of fact we will reach the pre-crisis level this year, and in 2012 GDP will be 3.4 percent more than parameters of 2008,” said Kudrin, who is also Deputy Prime Minister.

Besides, he believes the maximum admissible for Russia level of budget deficit is three percent of GDP. “Indeed, at the price of 93 dollars per barrel the deficit in 2012 will be under three percent of GDP, while the deficit over three percent will be a critical level, and risks for the economy will grow disproportionately,” the minister believes.

 

Kudrin: Russian government OKs lowering insurance premiums

MOSCOW, Jul 7 (PRIME) -- The Russian government has approved lowering insurance premium rates from 2012, Deputy Prime Minister and Finance Minister Alexei Kudrin said Thursday.

For annual salaries below 512,000 rubles, the insurance premiums rates are to be cut to 30% from the current 34% for all companies and to 20% from 26% for small companies, Kudrin said.

The government is to start charging insurance premiums on annual personal income exceeding 512,000 rubles at a 10% rate for all companies and at a 7% rate for all small-sized businesses operating in the production and social sectors from 2012, Kudrin added.

The move follows a recent call from President Dmitry Medvedev to cut the rates starting from 2012.

Meanwhile, earlier on Thursday, Russian Prime Minister Vladimir Putin reiterated that the potential losses to the federal budget, caused by the lowering of insurance premiums that companies pay on personal incomes, amount to 236 billion rubles in 2012 and 276 billion rubles in 2013.

 

Draft budget to be finalized early September - Kudrin.

MOSCOW, July 7 (Itar-Tass) —— In early September, the government will finally form the draft budget, Deputy Prime Minister, Finance Minister Alexei Kudrin told the media.

At Thursday’s Cabinet meeting the main budget parameters for 2012-2014 were adopted in principle.

"Now there begins the second phase of budget consideration within the government. Key parameters will be made known to each ministry. Each ministry by August 15 will present its proposals on all the tasks, activities, programs," Kudrin said.

"By September 7 there will be held meetings of the budget commission and on September 7 the budget commission meeting, chaired by the prime minister, will sum up the results of budget discussions and all controversies," he said.

Kudrin said that alongside this there was beginning the zero reading by State Duma factions. On Friday Deputy Finance Minister Tatyana Nesterenko is to meet with the faction of United Russia. Kudrin acknowledged that at this stage of budget work "differences remain on some problems," but he expressed confidence that within two months they should be dealt with.

 

Kudrin optimistic about Russia’s ability to get higher ratings.

MOSCOW, July 7 (Itar-Tass) —— Russia’s Deputy Prime Minister, Finance Minister Alexei Kudrin is optimistic about the possibility Russia may be awarded higher ratings by international agencies.

“We are in a good zone. Russia has good prospects. Russia will be growing faster than the other countries,” Kudrin told the media. “There are no incurable problems in Russia, except for its dependence on oil.”

 

Kudrin believes zero budget deficit by 2015 is realistic.

MOSCOW, July 7 (Itar-Tass) — Russian Finance Minister Alexei Kudrin believes it is realistic to cut the budget deficit to zero by 2015 on condition of having oil prices at the level of 100 dollars per barrel.

“Normal, stable work necessitates bringing the budget deficit to zero. This is a hard task if the price is 90 dollars, but if the price is 100 dollars, it will be not difficult to achieve a deficit-free budget,” Kudrin told reporters.