Russian National Wealth Fund

The Russian National Wealth Fund (Russian: Фонд национального благосостояния России) is Russia's sovereign wealth fund. It was created after the Stabilization Fund of the Russian Federation was split into two separate investment funds on 30 January 2008.

Russian National Wealth Fund
Native name
Фонд национального благосостояния России
IndustrySovereign wealth fund
Founded2008
Total assets$148.4 bn (January 2023)
Websiteminfin.gov.ru/en/key/nationalwealthfund/
National Wealth Fund, 2008–2017, with the blue line showing the nominal value in billion USD and the amber line showing the nominal value in billion RUB

Fund structure

The two funds are the Reserve Fund, which is invested abroad in low-yield securities and used when oil and gas incomes fall, and the National Wealth Fund, which invests in riskier, higher return vehicles, as well as federal budget expenditures. The Reserve Fund was given $125 billion and the National Wealth Fund was given $32 billion. The fund is controlled by the Ministry of Finance. One of the fund's main responsibilities is to support the Russian pension system.[1]

Overview

The National Wealth Fund will receive funds from investment returns or any excess funds that the Reserve Fund produces. The Reserve Fund is capped at 10% of Russian GDP, and any funds over that will be given to the Wealth Fund. The fund also has accumulated $72.71bn (as of 1 September 2016) from taxes and duties it collects on the production and export of oil and gas.[1]

According to the Russian Ministry of Finance, the foreign debt securities the fund can invest in must have credit ratings of AA- or higher by Fitch or Standard & Poor's, or a rating of Aa3 by Moody's.[1] Despite this, the fund agreed to buy (on 17 December 2013) $15 billion of Ukrainian Eurobonds, despite the fact that Ukraine had lower credit ratings at the time.[1][2][3]

The fund stands out from other global funds with it gathering investments into the national economy itself instead investing everything overseas, so it can provide a boost to the slow modernization of Russian infrastructure in a time of otherwise anemic investment. Other countries like Indonesia are following the Russian example in running a National Wealth Fund it is reported in 2020.[1] Of course, because of a lack of a real "hard currency" reserve, the fund can quickly lose value in a case of internal crisis.

The Russian National Wealth Fund was merged in 2017 with the remaining of Russia’s sovereign Reserve Fund. The Reserve fund was built up over years with profits from oil exports but amid low oil price prices was emptied by the end of 2017 and ceased to exist.

Size of the fund and historic numbers

Source by the Ministry of Finance of Russia:[4]

Date billions of $ billions of ₽  % of GDP
1 February 2008 32.000 783.310 1.9%
1 January 2009 87.970 2 584.490 6.3%
1 January 2010 91.560 2 769.020 7.1%
1 January 2011 88.440 2 695.520 5.8%
1 January 2012 86.790 2 794.430 4.6%
1 January 2013 88.590 2 690.630 4.0%
1 January 2014 88.630 2 900.640 4.0%
1 January 2015 78.000 4 388.090 5.3%
1 January 2016 71.72 5 227.18 6.1%
1 January 2017 71.870 4 359.160 4.7%
1 January 2018 65.150 3 752.940 3.6%
1 January 2019 58.10 4 036.05 3.7%
1 January 2020 125.560 7 773.060 7.3%
1 January 2021 183.36 13 545.66 11.7%
1 November 2021 197.75 13 945.07 12.1%
1 February 2022 174.9 13 610.27 10.2%
1 January 2023 [5][6] 148.4 10 434.58 7.8%
1 February 2023 [7] 155.3 10 807.60 7.2%
1 March 2023 [8] 147.2 11 106.40 7.4%

Sanctions
Main article: 2021-2022 Russo-Ukrainian crisis

Following the 2022 Russian invasion of Ukraine, several countries imposed economic sanctions on Russian banks, individuals and companies. On February 22, 2022, United States President Joe Biden announced new restrictions on activities involving the National Wealth Fund.[9]

On October 10, 2022, Prime Minister Mishustin ordered to allocate 1 trillion rubles from the National Welfare Fund to cover the budget deficit.[10]

See also

References
  1. Ukraine bailout could derail Putin's drive to boost Russian economy, Financial Times (18 December 2013)
  2. Russia cuts Ukraine gas price by a third, BBC News (17 December 2013)
  3. Ukraine to issue Eurobonds; Russia will purchase $15 bln, says Russian finance minister, Interfax-Ukraine (17 December 2013)
  4. "Ministry of Finance Russia, STATISTICS". Retrieved 25 December 2019.
  5. "Russia's National Wealth Fund at $148 billion at Jan 1 - Finance Ministry". euronews. 19 January 2023.
  6. "Russia | National Wealth Fund: Total Amount | CEIC". www.ceicdata.com. Retrieved 18 March 2023.
  7. "Russia | National Wealth Fund: Total Amount | CEIC". www.ceicdata.com. Retrieved 18 March 2023.
  8. "Russia | National Wealth Fund: Total Amount | CEIC". www.ceicdata.com. Retrieved 18 March 2023.
  9. "Fact Sheet: United States Imposes First Tranche of Swift and Severe Costs on Russia". The White House. 22 February 2022. Retrieved 23 February 2022.
  10. "Decree of the Government of the Russian Federation dated October 20, 2022 No. 3086-r". Official Internet portal of legal information. 10 October 2022.
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