Russian Finance Minister Anton Siluanov prompted more concerns over the health of the Russian economy Tuesday when he said there was a danger that the country's vast Reserve Fund could be entirely exhausted in 2016 if oil prices stay at their current level.
He told members of the upper house of parliament that if oil prices stayed around the current level of just below $50 a barrel and the dollar exchange rate remained unchanged, the budget may fail to receive 900 billion rubles ($14.14 billion) in revenues, Russian news agency TASS reported Tuesday.
"Our reserves volume [in 2015] will decrease by approximately 2.6 trillion rubles ($40.85 billion) - more than half," Siluanov said, according to TASS.
"This means that 2016 is the last year when we are able to spend our reserves that way. After that we will not have such resources," he warned.
"If the current oil prices and exchange rates remain the same, and the current oil price is at around $44 per barrels for Urals, and the ruble exchange rate is about 62 rubles to the dollar, we can (see the budget) fall 900 billion rubles short. We really face such risks," the minister said.
Russia's Reserve Fund accumulates federal budget revenues from both the production and export of oil and natural gas and oil products. It has been the main instrument for covering the government's budget shortfall which has been caused by lower oil prices. As of October 1, the Fund was worth 4.67 trillion rubles ($70.51 billion).
Earlier this month, the Russian finance ministry said it spent 402.2 billion rubles ($6 billion) from its Reserve Fund to cover the budget deficit in September, double the amount spent in July and August combined.
In July, the finance ministry had said it wanted to start replenishing the Reserve Fund if the oil price exceeded $70 a barrel, a far cry from current prices. Then, Finance Minister Siluanov expressed how important the Fund was for Russia, saying "We lose stability without reserves," Reuters reported.
There seems no immediate hope that oil prices can recover, however, especially as concerns over a slowdown in China continue and a glut in production shows no signs of easing.
Russia has relied heavily on its oil reserves as a source of revenue, but since oil prices dropped from a high of $114 a barrel (for benchmark Brent crude) last June to their current levels, Russia's economy has taken a hit.
Making matters worse, the country has been largely isolated on the global economic stage for its annexation of Crimea last year and role in the pro-Russian uprising in east Ukraine.
Sanctions placed on it by many western countries are still in place and Russia's economy shrank 4.3 percent in the third quarter of 2015, government data showed earlier this month. Its currency has been on a rollercoaster ride against the dollar over the last 18 months as a result.
The Reserve Fund had also been used recently (in May) to buy foreign currency in order to prevent the ruble from strengthening too much against the dollar (hindering the competitiveness of Russian exports). Since the summer, however, the currency resumed its slide and is currently trading at 63.9 rubles to the dollar.