Page 22 - RusRPTApr21

balance – is back and the federal budget should also go into surplus before the end of the year, says analysts with Sberbank.
Sberbank expects the budget to return to a surplus this year and the current account surplus to be even larger than previously expected. Meanwhile, its commodity strategy team has upgraded its 2021 oil price forecast to $68/bbl Brent (from $55/bbl).
“Although a higher oil price clearly has implications for the economy, because of the fiscal rule and currently high geopolitical premium, we still expect the ruble against the dollar to average 73 this year. Overall, we conclude Russia's finances appear to be in solid shape,” Sberbank said in a note.
Sberbank projects current account surplus at $70bn, $/RUBaveraging 73 in 2021. With what Sber now expects to be a higher oil price, the government will clearly collect more oil and gas revenues above the budgeted base price. However, thanks to the fiscal rule and also given that the geopolitical premium remains high, the higher oil price does not change the bank’s view on the ruble. However, Sber do see potential for the ruble to advance in 4Q21 after the Duma elections.
The federal budget is expected to run a surplus of 0.5% GDP in 2021. The reason for this is not only higher oil and gas revenues, but what are expected to be higher non-oil and gas revenues. The latter may allow the government to borrow around RUB0.5 trillion less in 2021. Also, RUB1 trillion in unspent funds from previous years is available, meaning the borrowing plan could be reduced even more.
Where the government has already said it will increase infrastructure investment it is intending to fund that spending from the National Welfare Fund (NWF). The liquid part of the NWF is already at 7.3% of GDP and is set to grow further. The government is very likely to start investing the sum above 7% of GDP in infrastructure projects. Sber now expects GDP to increase by 3% in 2021.
2.10 Russian oil exports to US hit record high in 2020
Russian oil shipments to the US hit a record high last year, according to calculations by Bloomberg, while at the same time Washington was ramping up its warnings about Europe’s energy dependence on Russia, The Moscow Times reports.
“Due to deprived access to Venezuelan crude and reduced shipments from OPEC, Russia has become the third-largest oil supplier to the US last year (7% of the market share). The US' increasing reliance on oil is seemingly at odds with its energy diplomacy,” Maria Shagina, a post doctoral fellow at the Geneva International Sanctions Network, said in a tweet.
Several commentators accused the US of a double standard, of increasingly its reliance on Russia oil but at the same time actively working against the completion of the Nord Stream 2 Russian gas pipeline between the Yamal gas fields and Germany as it would “undermine European energy security.”
22 RUSSIA Country Report April 2021 www.intellinews.com