National funds deliver fiscal flexibility

Reserve Fund: Designed to fund the budget and national debt. Funded by oil/gas revenues. Valued at $US85 billion. National Wealth Fund: Mandated to finance pension liabilities. Funded by oil/gas revenues. Valued at $US86.9 billion.

Source: CEIC

$100

$120

$20

$40

$60

$80

$0 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15

Jan-16
Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19

Provides buffer against oil outlook

Brent Oil Futures ($US/bbl)

Source: CME Group

made worse by Urals price discount

Source: Neste Oil

Putins Way - Enforce the (budget) law

The non-oil and gas revenue deficit is too large. The problems and challenges that we face are to stimulate economic growth, implement large scale social programs and at the same insulate the budget against sharp energy price fluctuations.

New budget rules = balanced budget

The 2013 budget and 201315 medium-term budget based on new fiscal rule. Federal spending capped at oil revenues + non-oil revenues + and net borrowing of 1 per cent of GDP. Fiscal balances to deteriorate in 2013 but improve in 2014 and 2015. Surplus forecast for 2015. Non-oil deficit is forecast to decline from 10.4 per cent of GDP in 2012 to 8.4 per cent of GDP in 2015.

Integrating into the global economy

WTO ascension August 2012 OECD estimates a positive impact equal to 3.3% of GDP Should increase competiveness and productivity over the medium and long term. Recent policy initiatives recycling fee on foreign cars - have raised questions about reform momentum