Page 47 - RusRPTSept20

5.2.4 Gross international reserves
Russia’s investment in the US treasury bonds grew 8.9% to $5.87bn in June, as seen by PRIME in the data of the US Department of the Treasury late on Monday. Of the total, $3.001bn are short-term bonds and $2.87bn are long- term bonds. Japan remained the largest US bondholder with $1.261 trillion, China was the second with $1.074 trillion.
The foreign currency and gold reserves (Fx/gold of GIR, Gross International Reserves) of the Central Bank of Russia (CBR) tipped over the historic record-high mark of $600bn as of August 7, beating the previous record of August 2008, when GIR stood at $598bn.
As analysed previously by Ben Aris for bne IntelliNews Moscow Blog, despite an oil price shock, a two-month lockdown of the entire Russian economy, a 20% devaluation of the ruble and an economic bailout package that is worth 10% of GDP, Russia managed to continue accumulating cash in what seems to be its cheapest crisis yet.
"The last 3 weeks have seen a rapid rise in the reserves of circa $9bn a week, but this was primarily the result of USD weakness that triggered upward revision of gold and EUR assets in Russia’s reserves," BCS Global Markets commented on August 14. At over $600bn, Russia’s GIR reserves have risen by 8.4% year to date.
Despite the broader currency trends in US dollar and euro that boosted reserves to its record-high volume, the "trend shows Russia’s remarkable level of resilience to negative pressures caused by the C-virus," BCS GM commented, seeing the news as positive.
Considering other state reserves and fiscal resources, BCS GM notes that despite posting a rising budget deficit (RUB1.5 trillion of 1.4% of GDP in 7M20), the deficit was funded through the transfer of profit received by the CBR from the sale of Sberbank shares and placement of new domestic ruble debt.
"Thus far, the government avoided tapping into its National Welfare Fund to support the budget: according to the Finance Ministry, on August 1, the NWF stood at $176bn – up 41% from the level recorded on January 1 2020," BCS GM comments.
"The data above shows a remarkable level of resilience in Russia’s fiscal policy to negative implications caused by the pandemic," chief economist of BCS GM Vladimir TIkhomirov wrote on August 14.
"At times when most nations in the world report soaring budget deficits accompanied by a rapid rise in their public debt levels, Russia shows continued growth in its reserves, low levels of public debt (circa 15% of GDP) and a small fiscal deficit," Tikhomirov reminds.
He notes that Russia's macro policymakers have done their homework: after 6 months since the start of 2008-2009 crisis Russian reserves fell 35%, while in 2014-2015 in the same period they declined by 20%.
At the same time, this year the trend is very different: in 6 months to August 7, Russia’s reserves rose by almost 7%, BCS GM economist stresses.
47 RUSSIA Country Report September 2020 www.intellinews.com