Decrease in Oil Prices After 2015 to Lead to Spending Cuts: Russian Finance Minister

MOSCOW, October 4 (RIA Novosti) - Expenditures of federal budget are not to be reduced in 2015 as oil prices decline, but should the trend continue, Russia will be forced to make cuts in subsequent years, Russian Finance Minister Anton Siluanov said Saturday.

"If the price of oil drops down further, next year we will fulfill all our obligations unconditionally," the minister said in an interview with Russia's Rossiya-1 broadcaster.

The price for Russia's main export crude Urals fell to $90 per barrel in September. However, the draft budget for 2015 was planned according to a price of $100 per barrel.

Siluanov added that in the case of reducing oil prices, Russia will have to use a reserve from the budget totaling some 70 million rubles ($1.7 million), which can be increased. The finance minister did not rule out the use of the country's Reserve Fund.

"And then we need to reconsider our commitments. Because we recently took a lot of new programs, making decisions on the basis of other macroeconomics," Siluanov explained.

The Minister acknowledged that there are other alternatives including raising taxes or increasing the budget deficit, but admitted that "Both are bad in a declining economy. Therefore, the only right way is to review all our expenses. It will not work without this."

On Tuesday, the Russian government presented to the lower parliamentary house the 2015-2017 draft federal budget, which envisages a deficit of 0.6 percent of Gross Domestic Product. GDP is expected to increase by 1.2 percent next year, and by 2.3 percent the following year.

Siluanov stated on Thursday that although Russian authorities have no plans of using resources from the Reserve Fund in 2015, they still retain the right to do so if necessary.

Inflation is forecast to be set at 5 percent next year. Russian President Vladimir Putin also stated that Russian authorities plan to ensure economic growth through structural reforms and added that the country's economic stability strongly relied on factors including a non-deficit budget, significant reserves, and a stable payment balance.