Page 78 - RusRPTJan21

from the $124.4bn it held at the start of 2020 – twice as much as the overall GIR accumulation.
There has been a fierce debate amongst Russia’s financial elite with former Finance Minister and Audit Chamber head Alexei Kudrin arguing that the whole point of the NWF is to provide resources for when Russia is hit by one of its periodic crises and so the NWF should be tapped for stimulus spending.
Finance Minister Anton Siluanov has taken the more narrow line that the NWF is to cover budget deficits in crises and while he does intend to use some of the money from the NWF for this purpose he has also increased the net sovereign borrowing by increasing the Russian Ministry of Finance ruble-denominated OFZ treasury bills issues from the usual circa RUB2.5 trillion to circa RUB4 trillion in 2020 to cover the deficit. This will increase Russia’s net sovereign debt from circa 14% of GDP to circa 20% of GDP, but crucially will mean that less money has to be drawn down from the NWF. The result of this decision is already clearly visible in the chart which shows that very little money has been withdrawn from the NWF and Russia goes into 2021 with even more money in its rainy day fund as it had at the start of 2020.
In general the Kremlin has been criticised for spending too little on stimulus as the total government outlay on extra spending to fight the crisis is estimated to be a mere 3%-4% of GDP – one of the lowest levels in the world – while most developed nations are spending anything between 5% to 20% of GDP on stimulus.
The reserves chart shows clearly that Russia continues to run the same austerity policies that are designed to preserve its cash pile which Russian President Vladimir Putin sees as a strategic weapon in the de facto economic war Russia is fighting with the US, rather than an economic resource that can be used to promote growth.
With a new Biden administration about to take over and already promising to increase the sanctions on Russia this may not be an entire stupid stance to take.
78 ​RUSSIA Country Report​ January 2021 ​ ​www.intellinews.com