By Maria Levitov and Alex Nicholson
Oct. 16 (Bloomberg) — Russia, the world’s biggest energy exporter, is facing shrinking government revenue as concern that the global economy may slip into recession pushes down oil prices.
The price of Urals blend of crude fell to $68.71 a barrel today, the lowest level this year, after peaking at $142.50 a barrel in July. It has averaged $106.85 a barrel since the beginning of the year, according to Bloomberg data.
The government is set to collect less money as revenue from energy exports grows at a slower pace and the central bank continues to spend its reserves to prop up the ruble amid global financial turmoil. Energy, including crude oil and natural gas, accounted for 73 percent of all exports to the Baltics and countries outside of the former Soviet Union through August.
“If the price keeps going down they will have to send the budget back to parliament looking for spending cuts,” said Vladimir Tikhomirov, the chief economist at UralSib Financial Corp. in Moscow, in a phone interview today. “Even in September the budget was still in surplus, so I don’t think there is a really big threat in the next three months.”
The budget surplus amounted to 8.1 percent of gross domestic product, or 2.53 trillion rubles ($100 billion) in the first nine months of this year and the budget will break even next year if the price of Urals crude averages $70 a barrel, according to Finance Minister Alexei Kudrin. The government expects the price to average more than $90 this year.
“The next three years will be more difficult than this successful year,” Kudrin warned lawmakers on Sept. 11 when he presented the budget.
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