Reuters news agency quotes the official, Alexei Kudrin, as saying the May surplus was used to pay down Russia's foreign debt. Much of the growth in government revenues has come from increased oil prices. However, Prime Minister Mikhail Kasyanov warned Russia's upper chamber of parliament, the Federation Council, that rising oil revenues threatens to cause inflation.
Russian law requires most of the oil revenues, which are in dollars, to be converted to rubles.
The Russian central bank therefore must print more currency, risking inflation. Email this article to a friend.