Russia Deploys Exotic New Weapon: A "Budget Surplus"

Authored by John Rubino via,

The price of oil is rising, which is obviously good news for those who sell it to the rest of us. Russia in particular seems to be enjoying the current trend, so much so that - if I’m understanding this correctly - Moscow is now receiving more in taxes than it’s spending. This is producing something called a “budget surplus,” which is a kind of currency war weapon that can be deployed to improve a country’s geopolitical position. Here’s a quick overview:

Russia To See Oil Revenues Jump Fivefold

(Oil Price) – Due to the oil price rally, Russia expects its oil and gas revenues to jump fivefold compared to the expected revenues set in its 2018 budget, according to the Finance Ministry that now expects Russia to post a budget surplus for the first time since 2011.

Oil and gas exports account for around 40 percent of Russia’s federal budget revenues.

Russia’s revenues from oil and gas sales are now expected at US$44.4 billion (2.74 trillion Russian rubles) for 2018, up from US$8.5 billion (527.6 billion rubles), according to a budget amendment by the Finance Ministry.

Due to the unexpectedly high oil prices, Russia is currently on track to book a first budget surplus since 2011, at 0.45 percent of gross domestic product (GDP), compared to previous expectations for a 1.3 percent of GDP deficit. The previous forecasts, however, were based on assumptions that the Urals crude blend would average around $40 a barrel. Between January and April, the price of Urals has averaged $66.15.

The additional oil revenues that Russia has earned above the Urals price assumption of $40 a barrel will be allocated to reserves instead of to spending, TASS news agency reports.

Analysts commented on the proposed budget amendment that Russia will have more revenues while it continues to plan for expenditures close to the original budget law.

“This will provide a very useful cushion to lean on if there are some adverse macro or geopolitical shocks,” Ivan Tchakarov, chief economist at Citi in Moscow, told Reuters.

One way that Russia is likely to use this exotic new weapon is to buy gold. The Russian central bank is already one of the biggest buyers of the metal, increasing its reserves by nearly 500 tons in less than three years – while, remember, it was running budget deficits.

Now, with a surplus to deploy, it’s reasonable to assume that the aggressive gold buying will at least continue and very possibly accelerate. The result: An increasingly gold-backed currency in a world of un-backed fiat, something that’s more of a threat to US financial hegemony than most of the hardware in the Kremlin’s military arsenal. For more on how this might play out, see Putin: Russia Needs to Get Rid of ‘Dollar Burden’ in Oil Trade. A few relevant quotes:

A few days ago, President Vladimir Putin was quoted as saying that Russia was mulling over ways to ‘get free’ of the U.S. dollar burden in oil trade as part of a plan to boost its national economic sovereignty...

Oil is traded in dollars on the exchange, TASS news agency quoted Putin as saying. “Certainly, we are thinking about what we need to do in order to get free of this burden.”


Sudden Debt stacking12321 Mon, 05/14/2018 - 14:26 Permalink

and the gold they buy comes from a country that doesn't want to officially admit it that it's selling it...

and that country...

only has a out of whack increasing deficit each year that outpaces the GDP of a lot of midsized countries... and that's nothing to be proud about...


In reply to by stacking12321

iLLivaniLLi19 King of Ruperts Land Mon, 05/14/2018 - 16:12 Permalink

"Life's but a walking shadow, a poor player, That struts and frets his hour upon the stage, And then is heard no more; it is a tale. Told by an idiot, full of sound and fury, Signifying nothing."


Have you ever considered international politics is just live action theatre? Do you know the Romans and Greeks actually really executed people (convicted criminals) in their plays?


Maybe the world is not as it appears and the 1,000 year hegemony is going as planned. Have you ever noticed that United States, Canada, and Russia own the top half of planet Earth?

In reply to by King of Ruperts Land

silverer Jack Oliver Mon, 05/14/2018 - 17:26 Permalink

I remember a few years back when Obama told the US citizens to "dump" their Russian stocks, because of the sanctions. That year, the MICEX (Russian stocks) returned 40%. Nothing like a little propaganda. But reality is never far behind. You will never see a US budget surplus in your lifetime. Newt Gingrich gave Bill Clinton a surplus, and was booed out of office. Republican Dennis Hastert as the new speaker quickly made up for lack of putting US children in debt, only to be outdone by Nancy Pelosi, who is absolutely the world record holder in producing untenable debt.

In reply to by Jack Oliver

slightlyskeptical Shemp 4 Victory Mon, 05/14/2018 - 14:12 Permalink

It was bad accounting, not necessarily theft. There is not necessarily any theft.


Lets say 10 toilets are sent to central command.


6 get sent to Europe

6  to Camp Pendelton

3 to Gitmo, who then sends those 3 and 2 more to Saudi Arabia

So we show 15 toilets being sent when only 10 were paid for

Doesn't necessitate theft

Just really bad bookkeeping which is probably covering up much lesser than $21 billion in theft.




In reply to by Shemp 4 Victory

Tarzan revolla Mon, 05/14/2018 - 13:16 Permalink

Those evil lazy bastards, don't they know the Ponzi must inflate, or fiat will collapse?

Common Russia, for the children do your part, barrow something, spend your kid's future, asap, Fiat is depending on it!

In reply to by revolla