MOSCOW, Jan. 17 (UPI) — After hinting at a new tax policy on the oil industry, the Russian government said nearly $2 billion will be set aside to help the economy.
Russia’s currency lost considerable value at the start of last year and the broader economy faced dual strains from lower crude oil prices and economic sanctions imposed after the 2014 annexation of the Crimean Peninsula from Ukraine.
Russian Prime Minister Dmitry Medvedev said as much as $1.8 billion, or 107.5 billion rubles under the current exchange rate, in stimulus was on the agenda for 2017.
“The funds will be earmarked for transport machine building, production of locomotives and cars, machine building in agriculture, construction, highway and public service, as well as machine building in food and manufacturing industry so that those sectors could maintain upward momentum,” he was quoted by Russian news agency Tass as saying.
Russia’s economy relies heavily on revenue from crude oil exports to the European and Asian markets. Maxim Oreshkin, the economic development minister, said inflation was within guidance and growth this year would be about 1 percent during the first half of the year, a rebound after oil-price related downturns last year.
David Lipton, a deputy director at the International Monetary Fund, told TASS last week that economic planners at the Kremlin had to prepare for best-case and worst-case scenarios for an economy that relies heavily on oil revenue.
“The Russian economy is going to be affected by oil market developments for sure,” he said.
Russia is party to multi-player agreement to trim production this year in order to offset the supply-side strains that pulled oil prices below $30 per barrel in early 2016. With oil holding near a level at which the Kremlin has pegged its budget, the country’s finance minister said a new tax regime could emerge by next year.
“It is in its final stage,” Finance Minister Anton Siluanov said.
