Russia's 2010 federal budget deficit could come in under 5.4% of GDP, 1.4% less than current projections, the finance minister said on Friday. Alexei Kudrin told a joint meeting of the Finance and Economic Development ministries that the 2010 deficit would be 5.2-5.4%, adding that the budget would be balanced with an average oil price of $95 per barrel. He said that the budget deficit in 2011 would be 4% of GDP with an oil price of $70 per barrel and 8% of GDP at $50, although that, he stressed, would be "a risky level."
This year, Russia will see its first budget deficit in nine years as a result of the world financial crisis and a drop in the oil price. Kudrin also said that the Reserve Fund would most likely last through 2011 and not be completely used up in 2010, as previously expected. Deputy Finance Minister Tatyana Nesterenko said earlier in the day that a new projected deficit of 5.1% of GDP was based on an adjusted macroeconomic forecast. "One possible scenario is a deficit reduction to 5.1%, if no additional spending commitments are made," she said.
Prime Minister Vladimir Putin told Friday's meeting that Russia had to stick to its plan to eliminate the budget deficit by 2015. In his April address to the lower house of parliament, Putin said the budget deficit should be decreased not by raising taxes, but by spending funds more efficiently. Earlier this year, the government borrowed money on international markets for the first time since the 1998 financial meltdown. Russia, which continues to rely on raw material exports as its principal source of budget revenue, was badly affected by the 2008 global economic crisis, but a quicker-than-expected recovery of oil prices has eased pressure on the federal budget.
