The Russian government has decided to borrow on the international debt market to fill an expected hole in the federal budget in 2017. A $3 billion Eurobond offered will most likely be floated in the spring. Finance Minister Anton Siluanov said to reporters recently that increased oil revenues will not be used for budgetary purposes but will be added to reserves to give the Russian Central Bank flexibility to cut interest rates to defend the ruble.
Siluanov said that Russia feels like it can close its budget deficit in the new year if the price of crude oil on international markets stays in the current range, reports Reuters. Russian President Vladimir Putin has endorsed the decision.
Russia has been active in the press talking up production cuts with OPEC in order to support the price of oil. The wild card in this scenario is if U.S. shale oil producers ramp production back up, crude could face price pressure once more.
