Oil Prices Push Trade Surplus Past $200Bln

The country's trade surplus grew to $201.2 billion last year, up from $152.7 billion in 2007, according to Federal Customs Service data released Friday, a jump driven by high oil prices throughout most of the year.

The burgeoning trade surplus combined with a windfall from heavy oil tariffs helped customs duties surpass taxes, including on mineral extraction, for the first time as the main source of revenue for the federal budget last year.

Prices for Urals crude, the country's main export blend, averaged $95 per barrel in 2008, reaching a high of $142.50 in July, before bottoming out at $32.34 in December. Exports of crude oil totaled $151 billion last year, a full 32 percent of the country's total exports, up from $114.1 billion in 2007.

Combined, the customs and tax services account for 95 percent of federal budget revenues. The Federal Tax Service did not respond to a written request for comment Friday.

"A very large part of that number [customs revenues] is the collection of export duties on oil," said Vladimir Tikhomirov, chief economist at UralSib.

The discrepancy is a worrying trend for the country's economy, which is headed for its first contraction after a decade of growth.

"The numbers show an economy that is dependent on import and export, rather than internal growth," said Sergei Perminov, an analyst at Rye, Man & Gor securities.

In 2003, revenues from tax collection were more than double those from customs tariffs, at 1.7 trillion rubles ($47 billion) and 760 billion rubles, respectively. By 2007, when the price of Urals crude averaged $65 per barrel, customs revenues had almost quadrupled.

"The growth in oil export tax revenues was based not on the quantity of oil shipped, but on oil prices, a factor the government has no control over," Tikhomirov said.

With oil prices at significantly lower levels and shrinking economic growth, however, the trend is not expected to continue into 2009, and the government is already revising its budget to account for an average oil price of $41 per barrel, down from the previous $95.

"Tariffs on exports will be much lower due to falling oil prices, while a weaker ruble will hit imports," Tikhomirov said. "And as the economy continues to weaken, tax collection from nonexports will fall off as well."

Federal Customs Service statistics for January 2009 show a 28 percent drop off in federal budget revenues compared with January of last year.

nEconomic growth slowed down sharply in the final quarter of 2008 to just 1.1 percent year on year, preliminary data from the Economic Development Ministry showed Friday, Reuters reported.

That was the slowest pace of growth since the economy stopped contracting in 1999 and undershot a consensus forecast for 2 percent growth. In the third quarter, the economy grew 6.2 percent. Without adjusting for seasonal factors, the economy actually showed a contraction of 1.9 percent in the final three months of 2008, the ministry estimated.