Russia’s Ministry of Finance has unveiled a national budget in hopes to deal with expected gyrations in the international crude oil markets. Learning from lessons during the 2008 financial crisis and boom/bust of crude prices, the government has laid out a plan that expects a drop in Brent Crude to $60 per barrel by 2016, followed by a price averaging $80 until 2030. During those times spending will be cut and the country’s $85 billion sovereign wealth fund can be tapped for necessary spending.
The country’s heavy reliance on oil sales has recently unnerved rating agencies. Currently, the government’s budget is dependent upon $100 oil, and may be why they recently tapped the credit markets to sell $7 billion in 10 year bonds.
The following is our rough coverage of the 2021 Sohn Investment Conference, which is being held virtually and features Brad Gerstner, Bill Gurley, Octahedron's Ram Parameswaran, Glenernie's Andrew Nunneley, and Lux's Josh Wolfe. Q1 2021 hedge fund letters, conferences and more Keep checking back as we will be updating this post as the conference goes Read More
Approximately 50% of budget revenue is derived from the sale of oil and gas, which flows through state-owned Gazprom. Recent shale gas discoveries in Europe, where Gazprom supplies a quarter of the gas used, and a non-stop boom in North America threaten the nation’s well-being. As inflation remains high and GDP slows, Russia is bracing for economic pains but seems to be planning accordingly.