MOSCOW- Russia will increase state borrowing by 875 billion roubles ($11.70 billion) in 2021 to compensate for a budget shortfall amid lower oil prices and the coronavirus pandemic, Finance Minister Anton Siluanov said on Wednesday.
Russia's debt-to-GDP ratio would rise to 20% next year and should stay at around that level as the country steps up budget spending in the next three years, Siluanov told a government meeting.
"We envisage an increase in costs compared to our pre-crisis budget plans," Siluanov said.
Russia is increasingly dependent on borrowing as it is facing the threat of extra sanctions over the suspected poisoning of Kremlin critic Alexei Navalny and Moscow's role in the political turmoil in neighbouring Belarus.
Among other ways to plug holes in the budget, Russia is considering raising a range of taxes for industries including its mining sector, sales of cigarettes and extraction of ultra-high viscous oil.
Russia expects its budget to remain in deficit for the next three years as its economy is seen falling by nearly 4% this year before returning to pre-crisis levels in the second half of 2021.
Economy Minister Maxim Reshetnikov, speaking at the same government meeting, said the end of an OPEC+ deal over output cuts would give an additional boost to the Russian economy in 2022.
The Russian rouble, which plunged to a four-year low against the euro and was near a six-month low versus the dollar earlier this month, was "slightly undervalued," Reshetnikov said.
The rouble should return to fair levels by the end of the year or early 2021, he said without elaborating.
($1 = 74.7900 roubles)
(Reporting by Darya Korsunskaya and Andrey Ostroukh; Writing by Gabrielle Tétrault-Farber and Alexander Marrow; Editing by Raissa Kasolowsky) ((Gabrielle.Tetrault-Farber@thomsonreuters.com;))