How to the government spend the oil money?

nce 2008 oil and gas revenues are accounted separately from other revenues of federal budget.

Oil and gas revenues of the federal budget are comprised of the following:

- oil and gas production tax (oil, natural gas, gas condensate);

- export customs duty on crude oil;

- export customs duty on natural gas;

- export customs duty on oil products.

Each year part of these revenues is applied as an oil and gas transfer to finance federal budget expenditures. Size of the oil and gas transfer is constituted by federal law on the federal budget for a corresponding fiscal year and planning period.

The size of the oil and gas transfer is determined in per cents of forecasted GDP in the corresponding year:

- in 2008 6.1%;

- in 2009 5.5%;

- in 2010 4.5%;

- in 2011 and subsequent years - 3.7%.

After oil and gas transfer is completely executed remaining oil and gas revenues are accumulated in the Reserve Fund. Regulatory size of the Reserve Fund is constituted by federal law on the federal budget for a corresponding fiscal year and planning period as an amount equal to 10% of forecasted GDP in corresponding year. Whenever Reserve Fund reaches aforementioned cap then remaining oil and gas revenues are transferred to the National Wealth Fund.

Source: Ministry of Finance of Russia