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The value of cash and liquid investments, that is, those that can be easily and quickly withdrawn, in the Russian National Welfare Fund fell from 8.9 trillion rubles (2.27 trillion CZK) at the end of last year to five trillion rubles (1.27 trillion CZK). .
The total value of all assets, including illiquid ones, fell by almost 12 percent to 12 trillion rubles in the same period, Bloomberg reports, citing data from the Russian Finance Ministry. However, according to Bloomberg, the value of shares in Russian companies and bonds issued to finance infrastructure projects increased by more than two trillion rubles.
“The overall size of the fund now seems completely irrelevant, as a large part of it has been invested in Russian stocks and infrastructure, which are essentially illiquid assets,” said Tatiana Orlova, an economist at Oxford Economics. “Only liquid investments can be considered reserves for worse times, the rest is gone,” she added.
Russia is maintaining its budget with reserves
It has taken years for the National Welfare Fund to amass trillions of rubles worth of assets, but now it will come under further pressure as the Russian economy continues to suffer from sanctions imposed by Western countries in response to the invasion of Ukraine, writes Bloomberg.
Last year alone, the Finance Ministry used about three trillion rubles from the fund to cover the budget deficit caused by increased military spending and measures to mitigate the impact of the war on the economy. In addition, it is planned to withdraw another 1.3 trillion rubles from the fund this year. In reality, however, it could be even more if revenue from oil sales declines, that is, if Russia sells a barrel for less than $60, which is the price that the Russian budget expects.
“If oil prices continue to ignore the risks of supply disruptions due to the war between Israel and Hamas, the remaining stocks of liquid assets in the fund will continue to decline, making Russia more vulnerable to shocks.” “The stocks will only last one to two years, if the export price of Russian oil falls below $50,” Bloomberg quoted Russian economist Alexander Isakov as saying.
According to the Russian Finance Ministry, the average price of Russian Urals oil fell 17 percent last year to $62.99 per barrel.
“If the energy price situation is completely negative, we will use the national social fund. However, if we see that the funds in the fund are decreasing, we will take other measures to balance the budget. “Of course we have no interest in cutting the national social fund and not having a cent left in reserve,” Russian Finance Minister Anton Siluanov said last month.
Thanks to Western help, Ukraine’s foreign exchange reserves grew by 42 percent last year
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