Page 10 - FSUOGM Week 31 2019

FSUOGM POLICY FSUOGM
Russia’s National Welfare Fund doubled in July to $124bn
RUSSIA
Uncon rmed reports suggest the NWF wil support the troubled downstream industry and the development of Arctic LNG tankers.
RUSSIA’S National Welfare Fund (NWF) dou- bled in July, increasing by RUB4.105 trillion, to RUB7.868 trillion, and in dollars terms by $64.479bn, to $124.137bn, the Ministry of Finance of Russia reported on August 2.
As of July 1, 2019, the amount of the fund was RUB3.763 trillion, which was equivalent to $59.658bn.
e sudden rise was caused by the Ministry of Finance adding cash to the NWF it siphons o from oil revenues as part of its sterilising process into temporary accounts.
Notably, the liquid part of the NWF reached 5.7% of GDP, approaching the threshold of 7%. e rules governing the fund say that above the threshold the government can spend any surplus as it likes. e Finance Ministry estimated that NWF will break 7% of GDP by the end of 2019, with funds available to spend estimated at RUB1.8 trillion in 2020 and RUB4.2 trillion in 2021. Recently there has been a vigorous debate on what to do with this extra money.
Proposals for spending the extra funding from NWF vary from supporting exports and investing in facilitating selling Russian produce abroad by the Ministry of Economic Develop- ment, to investing in infrastructure projects
proposed by the Finance Ministry, whereas the Central Bank of Russia (CBR) worries that this will stoke in ation and wants to hike the bar further.
Uncon rmed reports suggested that NWF is also eyed for supporting the troubled down- stream oil industry, and construction of lique- ed natural gas (LNG) tankers for Novatek gas major.
e ministry reported that in July, additional oil and gas revenues from the budget for 2018 were transferred to the fund in foreign curren- cies of the amounts of $30.207bn, €25.743bn and GBP5.065bn.
As of August 1, 2019, in separate accounts for funds of the NWF were $45.527bn, €39.202bn, GBP7.679bn and RUB98.8mn, according to the CBR.
Another $3bn was invested in Ukraine’s sov- ereign bonds, which the country defaulted on. RUB585.4bn was deposited with VEB.RF. More was invested to cover Russian issuers related to the implementation of infrastructure projects to the tune of RUB169.1bn and $4.113bn. Another RUB138.4bn was placed on deposits with VTB and Gazprombank in order to finance infra- structure projects. RUB279bn was invested in preferred shares of banks. ™
Naftogaz sues Russia over Crimean assets
UKRAINE
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UKRAINE’S state-owned gas company Na o- gaz has led a suit with the Hague Permanent Court of Arbitration (PCA) demanding Russia pay the company $5.2bn in compensation for assets lost following Russia’s annexation of the Crimea in 2014, the company said in a statement on July 31.
“Na ogaz Ukrainy and the companies that comprise the Na ogaz group led a suit to the tribunal of the Permanent Court of Arbitration in the Hague at the end of June containing claims for compensation of losses from expropriation of Na ogaz group’s assets in Crimea. e Naf- togaz group asks the court to oblige the Russian Federation to pay $5.2bn to the plainti s,” the statement read.
Na ogaz said it expected the PCA to make a decision on the case not earlier than by the end of 2020.
Amongst the assets Naftogaz lost were the Crimean natural gas company
Chernomorne egaz, which was nationalised in March 2014 when Crimea joined Russia.
e Ukrainian holding and six of its a liates led a suit to the Hague court over the allegedly lost assets in October 2016, basing claims on a 1998 investment protection agreement between Russia and Ukraine.
In March, the PCA found in favour of Naf- togaz and the six subsidiaries, concluding that Russia was liable for the unlawful seizure of Na ogaz assets in the Crimea under the bilat- eral investment treaty between Ukraine and Russia.
Na ogaz executive o cer Yury Vitrenko told bne IntelliNews that the company planned to demand the redemption of $8bn under the case, or principal debt of $5bn and interest.
e Russian Justice Ministry has refused to recognise the decision by the Hague arbitration court saying it has no jurisdiction to rule on domestic disputes.™
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w w w . N E W S B A S E . c o m Week 31 07•August•2019