The rally in oil prices, which have risen by around 30 % this year, also coincides with Russia’s economy emerging from the slump during the pandemic.
The Russian ruble crashed, and Russia’s oil income shrank as a result of the plunge in oil prices during the pandemic.
In March 2020, Russian Finance Minister Anton Siluanov warned that revenues from oil and gas would be $40 billion (RUB 3 trillion) lower than planned due to the tumbling oil prices.
Russia’s economy is not going as well as one would have hoped, the finance minister admitted back then, saying that the oil price factor alone was set to reduce the country’s budget income by nearly $40 billion compared to earlier estimates.
Russia was also said to be considering whether to adopt a kind of state oil hedging program, similar to Mexico’s oil hedge, to protect government revenues from oil price crashes in the future.
In 2021, the higher oil prices are pushing up Russia’s oil revenues, its key export income, and the government is discussing lower debt issues year, according to Bloomberg’s sources.
Officials are considering cutting the borrowing to $43 billion (RUB 3.2 trillion) from $50 billion (RUB 3.7 trillion), according to the sources, one of whom even said that the cut to borrowing in 2021 could double to $13.5 billion (RUB 1 trillion).
Author: Tsvetana Paraskova
