FX.co ★ Russia’s forecast sees oil at $40 a barrel

Russia’s Prime Minister Dmitry Medvedev confirmed the oil price forecast for 2017-2019. According to the base scenario, an average oil price of $40 a barrel was set out as a benchmark for the 2017–19 budgets. The base budget scenario was revised at a regular meeting between the premier, finance and economy ministers.

"At the moment, the basic version of the forecast assumes that Urals crude oil will stand at $40 a barrel. I would like to add that there is another plan in case of a much more pessimistic scenario, a conservative version of the prognosis that suggests a price of $25 a barrel," Medvedev said.

Besides, Prime Minister promised to avoid spending cuts as Russia’s authorities do not plan to increase taxes.

As usual, Medvedev complained that it is rather difficult to make forecasts in the current geopolitical situation. He explained that accuracy of the outlook is not perfect, but still it is necessary to revise forecasts. Dmitry Medvedev emphasized that fundamentals of the Russian economy remain rather tough amid sanctions, limited access to foreign capital and technologies, turbulence in the oil market, and some other politically motivated actions.

In general, Russia has been opposing its political rivals for several centuries. In such conditions it is almost impossible to devote close attention to social and economic spheres of the country. Historically, the government always places a high priority on foreign policy at a cost to the domestic economy.