In December, the Ministry of Finance spent 2.41 trillion rubles from the NWF to pay off the budget deficit of the Russian Federation, for 22 years

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This material was produced in Russia, where legislation restricts coverage of the Russian special military operation in Ukraine.

(Details added)

MOSCOW, Jan 18 (Reuters) – The Russian Ministry of Finance spent almost 3 trillion rubles from the National Wealth Fund (NWF) in 2022 to cover a hole in the treasury, and the liquid part of the reserves fell to 4.6% of GDP by the beginning of this year, the ministry said.

In December, part of the funds of the National Welfare Fund in accounts with the Bank of Russia in the amount of 28.5 billion euros, 2.77 billion pounds sterling and 121.9 billion Japanese yen was sold for 2.412 trillion rubles, and the proceeds were credited to a single account of the federal budget to finance it. deficit, the ministry said in a statement.

Thus, taking into account the 560 billion rubles spent from the National Welfare Fund in October-November, the Ministry of Finance in the fourth quarter directed 2.97 trillion rubles from the money-box to finance the budget hole.

At the end of December, the head of the ministry, Anton Siluanov, said that the Ministry of Finance would spend a little more than 2 trillion rubles from the NWF to pay off the deficit in 2022, which reached 3.3 trillion rubles, or 2.3% of GDP.

By the beginning of 2023, the total volume of the NWF, taking into account the placed funds, decreased to 10.43 trillion rubles, or 7.8% of GDP, which is equivalent to $148.35 billion, the Finance Ministry said. A month earlier, the fund had 11.39 trillion rubles (8.5% of GDP), or $186.5 billion.

The liquid assets of the NWF (funds on bank accounts with the Bank of Russia) by January 1 amounted to 6.13 trillion rubles ($87.19 billion), or 4.6% of GDP, having decreased from 7.60 trillion rubles ($124.5 billion), or 5.7% of GDP a month earlier.

The NWF, which was originally designed to support the pension system, will be the main source of financing the budget deficit in the coming years, along with borrowing, after Moscow launched what it calls a “special operation” in Ukraine, and the West responded with sweeping sanctions, including freezing half of the gold Russian reserves.

Taking into account the funds placed in bonds, shares and deposits in banks, the volume of the fund as of February 1, 2022, before the start of the “special operation”, amounted to 13.61 trillion rubles, or 10.2% of GDP, and free funds – 8.77 trillion rubles , or 6.6% of GDP.

In addition to financing a hole in the treasury, the authorities also spent almost 800 billion rubles from the NWF last year to save individual companies. In particular, Russian Railways received 467 billion rubles in two tranches, the state issued 50 billion rubles each to Gazprombank GZPRI.MM and the state corporation DOM.RF, bought out the shares of Aeroflot AFLT.MM for 52.5 billion rubles, and the shares of STLC for 58.3 billion rubles. .

Financing from the NWF last year was essentially emission, as the CBR did not sell foreign exchange assets from reserves due to sanctions, transferring the currency owned by the Ministry of Finance to its accounts and issuing new rubles to it.

On January 13, as part of the restart of the budget rule, the Central Bank, at the request of the Ministry of Finance, began selling yuan from the NWF to compensate the treasury for the missing rubles.

In 2023-2024, in accordance with the law on the budget, the Ministry of Finance can spend another 4.2 trillion rubles from the NWF to pay off the deficit.

As a result, according to the Ministry of Finance, by the end of 2024, the liquid funds of the NWF placed on accounts with the Central Bank may be reduced to 2.3 trillion rubles, or 1.4% of GDP, which the Accounts Chamber called the lowest level of Russia’s reserve funds in 20 years. (Daria Korsunskaya. Edited by Anastasia Teterevleva)

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