Russia is poised to resume purchases of foreign currency early this month after oil and gas revenues rebounded from recent lows, according to Bloomberg.

EDITED BY|ALEXANDER YANIXANA

ECONOMIC SECTION

3 MAY 2023

     The country's energy export revenues have been hit by Western sanctions and the embargo on oil and fuel exports to the European Union, but according to Bloomberg Economics data on Tuesday, that change has begun and revenues are now close to exceeding the target level set by the government. Thus, the Ministry of Finance is expected to announce the resumption of foreign currency purchases, which stopped last year after the invasion of Ukraine and the Western reaction to it.

"It will be important for the market if the country starts accumulating hard currency reserves again instead of spending them," Natalia Melshakova, an analyst at Freedom Holding, told the agency.

Part of the reason for the oil revenue refund is due to a change in the oil industry tax calculation formula that was implemented earlier this year. The formula is based on a new discount set at $25.

According to Russia's Finance Ministry, the change in the formula could add $7.46 billion (600 billion rubles) to the federal budget. The agency believes that Moscow is likely to start buying foreign currency for its sovereign wealth fund again, as analysts expect the purchases to start in June. Russia was relying on the sovereign wealth fund to fill the budget gap left by the decline in oil and gas budget contributions to income.

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