The liquid part of the National Wealth Fund (NWF) in March of this year is equivalent to 3.4 trillion rubles. This is the minimum since mid-2019 and almost 2.5 times less than at the beginning of 2022, writes RBC, based on data from the Ministry of Finance.
The liquid part of the NWF consists of funds not placed in any financial assets. They are held in accounts at the Bank of Russia and are denominated in rubles, yuan, and gold. The reduction in volume is due to the yuan and gold being exchanged for 1.3 trillion rubles to cover the federal budget deficit. Over 290 billion rubles were also invested in state enterprise bonds and deposits in VEB RF to finance infrastructure projects.
This is also confirmed by the Ministry of Finance. “In the use of the liquid part of the NWF, the main factors in previous periods were expenses to cover the budget deficit and investment in infrastructure projects,” the press service of the department confirmed to RBC.
The chief economist of “T-Investments” Sofya Donets emphasized in a conversation with RBC that the liquid part of the NWF could be exhausted if prices for Russian oil fall to just over $50 per barrel.
The director of the Center for Regional Policy of RANEPA Vladimir Klimanov considers it unlikely that the Ministry of Finance has a certain limit on the volume of liquid assets below which it does not want to fall: one can recall the experience of creating the Reserve Fund in 2008–2009, which “was easily exhausted” in two years.
In case of a shortage of NWF funds, their deficit coverage can be carried out through debt instruments or the privatization of smaller state-owned companies, added Emil Ablaev, an expert at the Center for Macroeconomic Analysis and Short-term Forecasting (CMASTF).