The state Duma approved in the second reading a new fiscal rule

© RIA Novosti / Natalia to Seliverstova in photobacteria of the State Duma of the Russian Federation. Archival photoThe state Duma approved in the second reading a new fiscal rule© RIA Novosti / Natalia to Seliverstova the image Bank

The state Duma at plenary session on Friday adopted in the second reading a government bill on a new design of budgetary rules and on the unification of the national welfare Fund (NWF) and Reserve Fund on the basis of the national welfare Fund.

The fiscal rule

Strap clipping on the price of Urals crude in the updated budget rule stipulates the level of 40 dollars per barrel. Oil and gas revenues received at a price above this strap, will be sent to the reserves.

The bill defines the limit to the expenditures of the Federal budget that does not exceed the amount of oil and gas revenues calculated on the basis of underlying oil prices, the base export prices for natural gas and a projected exchange rate of non-oil revenues and expenditure on debt service. The base price for the Urals oil set at $ 40 per barrel in the price of 2017 and is subject to annual indexation of 2% starting in 2018.

NWF + Reserve Fund

In the second reading the bill was amended on the Association of sovereign funds of the Russian Federation on the basis of the national welfare Fund. Deputy Finance Minister of Russia Vladimir Kolychev said that this Union is supposed in the conditions, when the projected exhaustion of the Reserve Fund against the background of significantly decreased over the past two to three years of oil prices.

Target unit of this Fund remains the same, what was the purpose of the preceding two funds: financing aimed at the balance of the pension insurance system, the financing of deficit of the Federal budget and co-financing of voluntary pension savings. To form the combined Fund is expected due to additional oil and gas revenues.

If the total amount of funds in the combined Fund would exceed 5% of GDP, its use is encouraged to limit the drop-down oil and gas revenues if total funds less 5%, to limit the amount of 1% of GDP.

The amendment provides that the Reserve Fund shall be credited to the national welfare Fund (pooled Fund) no later than 1 February 2018. The Finance Ministry will publish monthly data on the value of SWF assets at the beginning of the month, the funds are credited to the Fund, their placing and use in accounting month.

According to approved amendments, prior reaching the volume traded of the Fund’s assets placed with the Bank of Russia at the end of the next financial year and (or) the first and (or) the second year of the plan period, 7% of the projected GDP, placing NWF funds in other financial assets is not permitted except for the financing started prior to 1 January 2018 for sustainable infrastructure projects.