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A Russian one rouble coin is seen in this picture illustration taken April 5, 2022. REUTERS/Maxim Shemetov/Illustration
MOSCOW - Russia will boost budget spending and channel $89 billion to limit the impact of Western sanctions but will make sure state debt does not surge, the finance ministry said, promising to pursue macroeconomic stability.
Russia needs huge financial resources for its military operation in Ukraine, Finance Minister Anton Siluanov said in May, after Moscow sent tens of thousands of troops into Ukraine on Feb. 24, prompting the West to impose sweeping sanctions.
"This year is special. This year's situation will impact the way the budget is being formed in the future," Siluanov said on Monday, presenting the budget plan for the next three years.
"The main task is to secure the stability and reliability of budget policy," Siluanov said, adding it was important to create clear conditions for businesses and households. But he indicated that Russia's tax policies could be altered.
Russia needs to plan its revenues from oil and gas with caution given Western sanctions and also needs savings to address a possible deterioration in external conditions, Siluanov said.
He also said Russia will reinstate its budget or fiscal rule, which cap budget spending, linking it to its non-oil and gas revenues and channelling extra oil and gas revenues into its rainy-day fund. The rule has been suspended to help Moscow tackle the coronavirus pandemic.
The finance minister said the budget rule should be designed to help the government build up reserves and stabilise the rouble, which has strengthened to multi-year highs as a result of capital controls imposed by Moscow in response to sanctions.
Russia will channel around 5 trillion roubles ($89.4 billion) on priority actions to address the impact of sanctions, Vedomosti business daily reported on Monday, citing the finance ministry's new budget projections.
But Russia's state debt will not exceed 16% of gross domestic product in 2022-2024, TASS state news agency cited the ministry's budget plan. The finance ministry did not immediately reply to a Reuters request for comment about the projections.
(Reporting by Reuters, Editing by Gareth Jones and Mark Heinrich)