Since the beginning of the transition process, Russia has progressively built modern fiscal institutions and fundamentally reformed its tax system and fiscal framework. Moreover, fiscal outcomes improved markedly in the past dozen years, reflecting rising oil prices, strong output growth and a commitment to restrain spending of windfall gains, supported by an institutional mechanism to manage resource wealth. The government paid off most of its debt and accumulated assets in two oil funds, which financed the large fiscal stimulus during the global crisis. However, fiscal policy has not sufficiently insulated the economy from oil price fluctuations. The surge in expenditure during the boom preceding the crisis, coupled with the fiscal stimulus during the crisis, left Russia with a large non-oil deficit, making it vulnerable to a sharp fall in oil prices. Moreover, the large non-oil deficit implies suboptimal saving from oil revenues and puts upward pressure on the real exchange rate, hindering diversification of the economy. There is therefore a need for mediumterm consolidation, even though the budget will record a small surplus this year, with only moderate deficits foreseen over the next three years. To reduce the procyclical bias of fiscal policy that is re-emerging in the current high-oil-price environment, and to assist in the consolidation of the budget position, the non-oil deficit target in the Budget Code that was suspended during the crisis should be restored and complemented with binding ceilings on the annual growth in expenditures. Long-term fiscal pressures arising from demographic trends should be addressed in the first instance by equalising the pensionable ages for men and women and gradually raising the pensionable age in line with gains in longevity.