The Ministry of Finance reacted to the collapse of the ruble

The Ministry of Finance may suspend auctions with federal loan bonds due to the high volatility in the markets. Decisions on their implementation will be made taking into account market conditions, the ministry noted. The reduction in borrowing can be offset by other sources of financing. One on one with the “catastrophic” collapse in oil prices due to the collapse of the OPEC coalition + the ruble will not remain, the department promised.

High volatility in the financial markets may force the Ministry of Finance of the Russian Federation to suspend auctions with federal loan bonds (OFZ). This is stated in the message on the website of the department.

“Decisions on holding OFZ auctions will be made taking into account market conditions in order to facilitate the process of stabilizing the market situation and preventing excessive pressure on the debt market,” the press service of the Ministry of Finance said.

It is noted that the borrowing plan for 2020 involves raising 1.7 trillion rubles in the domestic market, and a total of 2.3 trillion rubles. If the borrowings are reduced to below the planned figures, the difference can be compensated by attracting other sources of financing the budget deficit.

In particular, the ministry noted, it is possible to use the balances on a single account of the federal budget. The Federal Treasury has about 4.2 trillion rubles in accounts with the Bank of Russia and credit organizations.

Federal loan bonds – ruble bonds issued by the Ministry of Finance of the Russian Federation. They are coupon – interest payments are provided for them.

If the ruble continues to fall and falls below the forecast level of 65.7 rubles per US dollar, the increase in the basic oil and gas revenues of the federal budget can be redirected to cover the shortage of funds in the event of suspension of auctions.

The Ministry of Finance notes that deviation of the national currency exchange rate from the forecast level for each ruble leads to a change in the basic income of the federal budget from the sale of oil and gas by 70 billion rubles.

One on one with the “catastrophic” collapse in oil prices due to the collapse of the OPEC coalition + the ruble will not remain, the department promised.

Recall that trading on the Moscow Exchange is not held today due to the weekend. However, at international Forex trading, the US dollar reached 73.28 rubles, the euro reached 83.80 rubles. The price of a barrel of Brent oil fell by 35.5%, reaching $ 33.48, while the price of a WTI barrel fell by 38% to $ 29.96.

The fall in oil prices caused a breakdown in negotiations to reduce oil production. The Russian delegation opposed the extension of the OPEC + agreement.

Russia and Saudi Arabia, which are the main participants in the deal to reduce OPEC + oil production, were unable to agree on a further reduction in production due to the spread of coronavirus, sources told Bloomberg and Reuters.

The issue was discussed at a meeting of the monitoring committee on March 4. Saudi Arabia has proposed reducing oil production by 1.5 million barrels per day. Russia considers such measures unnecessary. Shortly before that, Russian President Vladimir Putin said that the Russian side was ready for active cooperation with foreign partners in the global oil market. “This mechanism, which we created together with other leading oil producing countries, has already established itself as an effective tool in ensuring long-term stability in global energy markets,” he said.

Russian Finance Minister Anton Siluanov previously stated that “our budget is protected,” and even with oil prices at $ 30 per barrel, Russia is not in danger.

On March 8, it became known that Saudi Arabia intends to increase oil production in April to 10 million barrels per day in order to put pressure on Russia and other countries. According to Bloomberg sources, Riyadh in this way wants to force them to resume negotiations with OPEC member countries. According to available information, Saudi Arabia, if necessary, can also increase oil production to 12 million barrels per day. In addition, on Saturday, the Saudis introduced massive discounts on their official oil sales prices.

Goldman Sachs, an American investment bank, believes that the price of a barrel of oil may drop to $ 20 due to the unstable situation in the global oil market. The regulator’s report notes that such a collapse in prices will decisively change forecasts for oil and gas markets. Meanwhile, the drop in the price of oil futures in the first seconds of the opening of Asian exchanges by more than 30% was the second largest in history after the collapse in 1991 during the Persian Gulf war, when the Americans bombed Iraq.