Russian Government May Have USD 3-5 Billion Reserve by End of 2003

The current year may turn out to be more favourable for Russia than expected. This was suggested by Finance Minister Alexei Kudrin at the annual 'Russia: Developing Success' conference. According to Kudrin, high oil prices may continue until the end of the year. In this case Russia will be able to deposit around 100-150 billion roubles (USD 3.2-4.8 billion) in its so-called stabilisation fund.

Kudrin said that an increase in export duty on oil to USD 30-40 a tonne is expected by March 1. The Finance Ministry calculates that this will bring an extra USD 500 million to the Russian budget. The Finance Minister added that 'other effects connected with high oil prices will also be seen.'

Kudrin stressed that the stabilisation fund should be used 'strictly for reducing risks in years when oil prices are less favourable for Russia.' The Finance Minister predicts that oil prices may fall as low as USD 17 or 13 a barrel in the next few years. He said that the Russian budget is based on an average oil price of no less that USD 18.5 a barrel. The stabilisation fund should ensure that budget commitments are met even if oil prices remain below this level for a number of years.