Effect of ruble strengthening nearly neutral for Russian budget – Nesterenko

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MOSCOW. March 25 (Interfax) – Ruble strengthening in excess of that assumed in the 2015 budget would lead to both lower revenue and lower spending, meaning that the net impact on the budget will be neutral, First Deputy Finance Minister Tatyana Nesterenko said.

“The ruble exchange rate and the price of oil [assumed in the budget] are forecasts calculated as the annual average. Right now we are very close to those average annual figures. To speak of the possibility of a shift in the trends assumed in the forecast, then it is important to say that the ruble exchange rate affects revenue and spending,” Nesterenko told journalists on Wednesday when asked about the apparent stabilization of the ruble at a stronger level than that assumed in the budget (61.5 rubles/$1).

Very much budget spending depends on the ruble exchange rate, including external debt servicing and international obligations, she said.

“This could be a balanced effect for revenue and spending. We have fairly large foreign currency liabilities. Accordingly, they will also be recalculated,” Nesterenko said.

“If the trends change, if forecast estimates change, the first thing that will be done is to go to parliament and introduce amendments,” she said.

The dollar fell to its lowest level on the Moscow Exchange (MOEX: MOEX) on Wednesday, dropping below 57 rubles/$1, as the Russian currency gained from bullish sentiment on capital markets and higher demand for ruble liquidity. The previous minimum for the dollar in 2015 was 57.52 rubles/$1 on January 5.

The dollar has declined in each of the last eight trading sessions (beginning March 13), shedding over 5 rubles or more than 8% in that time. Analysts credit the ruble strengthening to the halt in the growth of the dollar’s value on the global market and the halt in oil price declines, as well as gains in Russian equities. One other factor is heightened demand for rubles heading into the tax payment period.