S&P: USD 60 per barrel oil price to cut Russia's rating three notches.

By bne IntelliNews March 27, 2012
Standard & Poor's announced that should global Urals blend oil price under a stress scenario decline to USD 60 per barrel, Russia's long-term foreign currency rating of BBB/Stable would be cut be three notches to below investment-grade level. Such a decline in oil prices after record-high average of USD 110 per barrel seen in 2011 and current average of USD 125 per barrel would result in 8% of GDP budget deficit. Overall a USD 10 decline in prices directly and indirectly translates into 1.4% of GDP decline in state revenues. S&P proposes to take into account real 10-year average oil prices as budget base, according to which the balance would be balanced at USD 55 oil price in 2011, USD 63 in 2012, USD 70 in 2013, USD 78 in 2014, and USD 85 in 2015. Official oil price base sees balanced budget in 2012 at USD 105 per barrel, declining to USD 95 in 2016. Agency notes that as of 2016 EconMin's oil price base approaches USD 90 and until then a transitional period will be in place at which the base price oil price is higher than the average for the past ten years. Previously FinMin Anton Siluanov admitted that should the 10-year average oil price be taken as the base, budget would be balanced at USD 70 per barrel price, but currently this is not possible given the amount of state spending committed. 2012 budget is planned with a 1.5% of GDP deficit given a USD 100 per barrel oil price.

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