Page 44 - RusRPTFeb20

Experts interviewed by TASS expect Russia to keep buying US government securities despite the announced de-dollarization policy.
According to the data provided by the US Department of the Treasury, Russian holdings of the US debt increased by $794mn in November 2019 to $11.491bn, including $8.512bn worth of short-term securities and $2.979bn worth of long-term securities, ​TASS ​reports.
The expected increase in Russia’s investments in the US national debt is due to the Central Bank’s intention to diversify its international reserves. However, the growth in these assets is modest, according to BCS Premier’s chief analyst Anton Pokatovich.
Russia is not even among top 30 biggest holders of the US state debt now. Japan remains the leader on that list followed by China and the UK. Pokatovich expects Russian investments in US Treasury securities to be cautiously increased in coming months.
The assets of the Russian Oil Fund doubled last year. ​With the rise in oil prices and the stabilization of economic development in Russia, it has been possible to replenish the country's oil fund, the National Welfare Fund, with oil and gas revenues, after a few years' hiatus. At the end of last year, the fund stood at RUB7,800bn ($126bn), equivalent to about 7% of GDP.
Last year, the fund grew by nearly $70bn. The increase was mainly due to the transfer of oil and gas revenues in 2018 to the fund in the summer. RUB6,100bn ($99bn, well over 5% of GDP) of the Fund's assets are held with the Central Bank as part of Russia's foreign exchange reserves and are invested in liquid dollar, euro and pound items. The rest of the Fund's assets are long-term deposits with Russian financial institutions and lending for infrastructure projects.
According to Russia's current budget rule, oil and gas revenues above the reference price of oil ($42 a barrel in 2020) will be saved in the fund. The Russian Ministry of Finance forecasts the average price of Urals oil this year at $57 a barrel and expects the fund to grow to RUB11,000bn (9% of GDP) by the end of the year.
The National Welfare Fund was originally intended to cover the cost of the pension scheme. Today, however, it is mainly intended to counteract cyclical fluctuations and can, under certain conditions, be used to cover budget deficits. Funds were used for this purpose after the oil price collapsed in 2014. Fund resources were channelled to finance budget expenditures totalling approximately $90bn in 2015-17.
If the Fund's liquid assets exceed 7% of GDP, it is also possible to invest them in support of economic development. A bill is currently being drafted to allow up to RUB1,000bn ($16bn) to be used to finance infrastructure projects and export credits between 2020 and 22.
44​ RUSSIA Country Report​ February 2020 ​ ​www.intellinews.com