Russia’s budget deficit has increased more than expected, the Russian Finance Ministry reports. The Russians previously assumed a deficit of 2% of GDP, but the introduction of the oil price cap has widened the deficit.
And with that, European sanctions appear to be paying off, thinks BNR in-house economist Han de Jong, but they haven’t yet achieved their ultimate goal. “They have had an impact on the Russian economy from the beginning, but if your goal is to end the war, we have to conclude that that goal has not yet been achieved.”
He therefore believes that the price cap will have an impact. ‘Although it is difficult to estimate exactly how much exactly.’
Under the ceiling
Where the Russian oil price ceiling was set at €60 a barrel, the oil price has already fallen below that ceiling. De Jong: ‘Before the war, the price of Russian oil was about the same as the price of Brent oil. But it’s now about $15 to $20 below that price, so about $57 today. This is because we are buying less oil from Russia and Russia needs to get rid of the oil. This is their main export product.’
According to De Jong, countries like India and China are keen, but at a lower price. “Less than Brent anyway, and that costs the Russians quite a bit of profit. But to what extent the price cap is really effective, I dare to doubt.’
Ruble
The ruble has also fallen by about 20 percent in six months, notes De Jong. “And especially in recent weeks the ruble has weakened,” he continues. ‘No central bank likes it very much. But put that into perspective: At the beginning of the year, there were 50 to 75 rubles in the dollar. Subsequently, the number rose to 130 rubles per dollar. It was very weak, but then they sharply raised interest rates and limited capital outflows.’
This would have partly saved the ruble, thinks De Jong. “The ruble was much stronger this summer than at the beginning of the year, but now it is falling again. I don’t think they care about the current level, but if the decline continues, they will find it annoying. And then there is an intervention ».
Source: BNR
Sharon Rock is an author and journalist who writes for 24 News Globe. She has a passion for learning about different cultures and understanding the complexities of the world. With a talent for explaining complex global issues in an accessible and engaging way, Sharon has become a respected voice in the field of world news journalism.
