CUT-OFF PRICE IN THE BUDGET RULE MECHANISM

Abstract

When we talk about the state's dependence on exported resources, we are referring to the fact that a significant portion of the country's income and gross domestic product comes from the sale of commodities such as oil, gas, coal, and other natural resources. This structure is common in many countries that rely heavily on natural resources, including the Russian Federation. The budget rule serves as a key tool in implementing foreign economic policies. In recent decades, there have been several events in the global economy that have shaken it and prompted countries to revise their fiscal policies, with the main criterion being the change in the budget rule. Major global resource exporters, including the Russian Federation, receive super-profits from their foreign economic operations, and in order to minimize their impact on the domestic economy, they implement a budget rule as part of their government budget. The budget rule is introduced by countries to regulate their budget expenditures and set an upper limit on their deficit and public debt. The cut-off price serves as the basis for the budget rule in many resource-dependent countries. The cut-off price is determined in a way that ensures the balance of government spending in both the economy and social welfare. The budget rule is a macroeconomic regulator, a tool for budget constraints. The sanctions imposed on Russia, specifically on the oil and gas sector, have literally destroyed the system of existing budget norms, and it will no longer be possible to return to the previous format. The study focuses on the global practice of implementing the budget rule during various periods of economic crises. It identifies the main risks and threats associated with ineffective budget policy management. Additionally, the article provides an overview of the current state of implementing the budget rule, taking into account the subsequent development of the Russian national oil index.