Page 56 - RusRPTDec19

6.1.2 ​Budget dynamics - specific issues...
The rules of investing the sovereign National Welfare Fund (NWF) prepared by the Finance Ministry have been approved ​by PM Dmitry Medvedev, ​Vedomosti d​ aily reported on November 25 citing unnamed federal officials. As reported by ​bne IntelliNews,​ spending the NWF has been the focus of the policy debate this year. The ​government came under fire​ from the central bank and the Audit Chamber for its plans to unseal the NWF after its assets grow to more than 7% of GDP. However, the Finance Ministry seems to have chosen a prudent and conservative approach, setting tight rules for co-investment of the fund that one wag described as “providing NWF funding only for projects that don't really need the funding.” Reportedly, the share of the NWF financing should not exceed 20% of the supported project, with the principal investor bringing at least 20%, while the minimum return yield on NWF investment should be on par with yields of OFZ federal bonds (currently 6.5% for 10-year bonds), according to ​Vedomosti's​ sources. The government might also cap the total amount to be invested from the NWF in 2020-2022 at RUB1 trillion ($15.6bn), the Finance Minister Anton Siluanov previously announced. This makes only a small share of potential NWF investment. It is expected that the liquid part of NWF will pass 7% of GDP mark by the end of 2019, with funds available to spend estimated at ​RUB1.8 trillion in 2020​ and RUB4.2 trillion in 2021. Reports suggested that possible investment projects for NWF financing include ​urban infrastructure development​ and ​Ust-Lug gas-chemical complex​, projects of ​Russian Railways​, and others. Analysts surveyed by ​Vedomosti b​ elieve that the limitation reportedly proposed by the Finance Ministry will seriously limit the number of eligible projects and will most likely end up with solid projects that in any case do not strongly depend on state support. Nevertheless, NWF funding would still remain cheaper than the
56​ RUSSIA Country Report​ December 2019 ​ ​www.intellinews.com