The Finance Ministry will replenish the Reserve Fund 600 billion at the end of the year

The Ministry of Finance

Photo: Ekaterina Kuzmina / RBC

The Ministry of Finance revealed how much of the currency is planning to purchase for all 2017. In rubles it will be more than 600 billion rubles, and they will replenish the Reserve Fund

The Ministry of Finance by the end of 2017 will purchase currency in the amount equivalent to 616 billion rubles., to be prepared by the Ministry of draft amendments to the Federal budget. In the Appendix “Sources of funding Federal budget deficit” (available on regulation.gov.ru) States that the completion of an “other Fund balances the Federal budget” in 2017 is expected to amount 616,2 billion. This line is not in the appropriate application of the current law on the budget. It appeared because in February the Ministry of Finance under the transitional rules budget buys foreign currency on the windfall from oil for more than $40 per barrel.

The press service of the Ministry of Finance has confirmed RBC that under the change of other budget balances implied by accumulation on a separate account by year-end currency purchased by the Ministry of Finance in the framework of current operations on purchase of currency.

Anton Siluanov

Photo: Mikhail Japaridze / TASS

Finance Minister Anton Siluanov said earlier that the funds acquired through these operations are accumulated in foreign currency account in the Central Bank, and by the end of the year on the accumulated amount will be deposited to the Reserve Fund. The expenditure of the Reserve Fund to cover the budget deficit this year is projected to be 1.06 trillion rubles, follows from the proposed amendments (almost the same as laid down in the current law) but de facto the use of the reserves will be less by 616 billion rubles as of may 1 in the Reserve Fund in ruble terms remains to 931 billion rubles, it ceased to replenish with oil and gas revenues following the collapse in oil prices.

616 bn (or RUB 56 billion on average per month) — it is the expected result for procurement of the Ministry of Finance, the analyst of Raiffeisenbank Denis Poryvai. In February the Ministry of Finance purchased currency of approximately $4 billion, to increase the volume of purchases will help him the weakening of the ruble, the analyst believes. “There will be growth of the ruble price of oil, there will be a greater amount of lost oil and gas revenues, which will increase the volume of intervention,” he notes.

In the preparation of amendments the Ministry of Finance proceeded from the underlying macroeconomic forecast of Ministry of economic development, said RBC representative of the Ministry of economic development. The forecast suggests the weakening of the ruble to 64.2 rubles per dollar per year on average. Thus, we can assume that the Ministry of Finance will buy the currency with approximately $9.6 billion

On the exchange rate of purchases of currency impact, although in previous months the impact was not due to seasonal strong balance of payments, Poryvai adds: “there is some local factor, which will soon have to cease. Accordingly, the course will come to the equilibrium values. When that happens, hard to say. It is most likely that in the summer, when will dividend”. “Then that $10 billion will be very sensitive [of the ruble]. Intervention, if they will become more noticeable,” — says the analyst.

The Treasury buys the currency since February, while the volume of purchases consistently declined. In February, the Agency has conducted on the intervention of 113.1 billion rubles., in March to 70.5 billion rubles in April — 69.9 bn In may, the Treasury will purchase only 8.5 billion rubles due to the fact that by the end of April actually received a windfall of oil and gas was much less than expected by the Agency.

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