The Federal Law introduces amendments to the Budget Code of the Russian Federation that envisage the establishment of a new approach to the mechanism of the ”budget rule“ used to determine the total volume of federal budget expenditures.
Federal budget expenditures in the coming financial year and the planning period cannot exceed the amount of oil and gas revenue calculated based on the base price for oil, the base export price for natural gas, the projected exchange rate of the US dollar against the ruble, the projected non-oil revenue and the projected public debt servicing expense. According to the Federal Law, the base price for Urals crude oil is set at $40 per barrel in 2017 and is subject to a 2-percent annual indexation starting in 2018.
The new mechanism of the ”budget rule“ is expected to be applied when drafting the main parameters of the federal budget for 2019 and subsequent periods.
The Federal Law unites sovereign funds in the National Welfare Fund and establishes certain restrictions on the use of its funds.