Russia's Finance Ministry expects higher world oil prices in 2004

Vice Prime Minister and Finance Minister Alexei Kudrin said in the Federation Council on Wednesday that Russia's Ministry of Finance expects world prices of oil in 2004 to be higher than previously forecasted.

"World market trends show that in the first quarter and even the first half of 2004, oil prices will be higher than those forecasted during the formation of the federal budget for 2004," Mr. Kudrin said.

"This will enable economic growth to be accelerated and the stabilization fund to grow more quickly", he noted.

Mr. Kudrin said that income from oil sales would be remitted to the stabilization fund if its price were over $20 per barrel and revenues from the export quotas for oil products will also be transferred to the fund. According to forecasts, by the end of 2004 the stabilization fund must amount to 83.4 billion rubles.

The deputy prime minister said that, with the forecasted oil prices in 2005 being $22.5 per barrel, and $23 in 2006, the stabilization fund must reach 500 billion rubles by the end of 2006. "It is a so-called 'cushion' which is necessary to protect all of the social programs in the budget," Mr. Kudrin noted.