Average Russian Crude Price For $40: New Budget Draft

The Russian Finance Ministry proposed on Saturday the project of next year?s federal budget for the Cabinet of Ministers? consideration, the Interfax news agency reported.

It is planned that in 2006 the federal budget?s profits will amount to 5.046 trillion rubles ($177 billion), while expenditures will amount to 4.27 trillion rubles ($150 billion). Therefore the budget surplus next year should amount to 776 billion rubles ($27 billion). According to the Finance Ministry?s calculations, by the end of 2006 Russia?s Stabilization Fund which accumulates windfall oil export revenues should hold 2.132 trillion rubles ($75 billion).

According to the draft budget inflation in 2006 will amount to 7.5-8 percent. The budget was drafted on the basis that the average price for Russian Urals blend oil will be $40 per barrel. The cutoff price of Russian oil after which export tariff revenues will go to the Stabilization Fund is set at $27 per barrel. Ruble?s exchange rate against the U.S. dollar is believed to be 28.6 rubles per dollar.

It is expected that the Russian government will consider the budget draft at its regular meeting on Thursday, Aug 18. The approved project has to be sent to the State Duma, the lower house of the Russian parliament, before Aug 26.