The Federation Council approved a new budget rule and the unification of the national Fund

The Federation Council on Tuesday approved a government law on the new design of budgetary rules and on the unification of the national welfare Fund and the Reserve Fund on the basis of the national welfare Fund.

Strap clipping on the price of Urals crude in the updated budget rule is set at $ 40 per barrel. Additional oil and gas revenues received from rates above this strap, will be sent to the reserves.

The law defines the limit to the expenditures of the Federal budget that does not exceed the amount of oil and gas revenues calculated on the basis of underlying oil prices, the base export prices for natural gas and a projected exchange rate of non-oil revenues and expenditure on debt service.

The base price for the Urals oil set at $ 40 per barrel in the price of 2017 and is subject to annual indexation of 2% starting in 2018.

The law also provides for the Association of sovereign funds of the Russian Federation on the basis of the national welfare Fund. If the total amount of funds in the combined Fund would exceed 5% of GDP, its use is encouraged to limit the amount of lost oil and gas revenues. If the total amount of funds is less than 5%, then the volume of use will be limited to 1% of GDP.

The law provides that the Reserve Fund shall be credited to the national welfare Fund (pooled Fund) no later than 1 February 2018. The Finance Ministry will publish monthly data on the value of SWF assets at the beginning of the month, the crediting of funds to the Fund, their placing and use in accounting month.