Bloomberg News

Russia May Balance 2011 Budget With Oil at $115, Kudrin Says

March 14, 2011

Russia may balance its budget this year if oil averages about $115 a barrel, or more than 50 percent above the government’s target price for the country’s chief export, Finance Minister Alexei Kudrin said.

“We would need to take an average price for the year of about $115” to balance the budget, Kudrin told reporters in Moscow today. Higher oil prices may push the deficit below 2 percent of gross domestic product, he said on Feb. 28.

Urals crude, Russia’s main export blend, has averaged $100.14 this year, reaching as much as $114 on March 1. The government expects the budget to remain in deficit through 2014 based on an average price for Urals crude of $75 this year and $78 in 2012.

Russia last month ran a budget surplus of 52.8 billion rubles ($1.9 billion), or about 0.7 percent of GDP, the Finance Ministry said on March 11. The government expects to narrow the deficit to 3.6 percent from last year’s gap of 3.9 percent.

The budget would balance at $99.9 a barrel, Chris Weafer, chief strategist at UralSib Financial Corp., said in an e-mailed note today. Troika Dialog sees the breakeven price at $105, Evgeny Gavrilenkov, chief economist in Moscow at Troika Dialog, said in a research note today.

Higher oil prices won’t disrupt the government’s planned asset sales, Kudrin said. Economy Minister Elvira Nabiullina said earlier today that the state may not have enough time to sell a stake in OAO Sberbank, its largest lender, this year.

“We’re more dependent on the condition of global markets,” Kudrin said. “The market is still unstable, but for we are optimistic.”

Russia raised 95.7 billion rubles in February when it sold a 10 percent stake of VTB Group, the country’s second-largest lender, in the biggest offering of assets in almost four years.

To contact the reporters on this story: Lyubov Pronina in Moscow at lpronina@bloomberg.net; Scott Rose in London at rrose10@bloomberg.net.

To contact the editor responsible for this story: Willy Morris at wmorris@bloomberg.net.


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