MOSCOW, June 6 (RIA Novosti) – President Vladimir Putin has signed amendments to the 2012 budget on Wednesday, considerably increasing the projected oil price for this year to narrow the budget deficit, the Kremlin website reported.
The amendments were initiated in the spring of 2012 when the price of Russia’s Urals export crude blend hovered at the level of $115-120 per barrel, prompting the government to increase the projected average oil price for the year from $100 to $115 per barrel.
The oil price forecast change required major changes to the 2012 budget. Under the new projections, the budget deficit will narrow from 876.589 billion rubles ($27 billion) or 1.5 percent of GDP to just 68.144 billion rubles ($2 billion) or 0.1 percent of GDP.
The oil price forecast upgrade will boost projected budget revenues from the approved 11.8 trillion rubles ($368 billion) to 12.7 trillion rubles ($398 billion) while revenues from oil and gas, Russia’s key export commodities, will rise by as much as 808 billion rubles.
Putin signed the oil price forecast upgrade despite the latest developments in the global oil markets. Oil prices have nosedived in the past several weeks, sinking past the $100 per barrel level amid increased investor concerns about the slowing of the world economy caused by the flaring eurozone debt crisis and worsening macroeconomic data from the U.S. and China.