Page 68 - RusRPTFeb24

The NWF represents assets available to the government in times of revenue shortfall and was specifically set up, together with the now long since deleted Reserve Fund.
At the beginning of 2024, the NWF stood at 8% of GDP, equivalent to $133bn. However, this comprises two distinct asset types: $55.8bn in liquid cash-like reserves and $77.2bn in illiquid assets, including corporate loans, bonds, and equities. Moreover, the bulk of the fund is in, not dollars.
When revenue is low, the government can tap into the liquid reserves (cash-like assets) but not the illiquid portion of the fund. Originally designed to stabilise Russia's oil income during commodity cycles, the NWF's assets were intended to be highly liquid, given the unpredictability of economic shocks.
However, the government has increasingly utilised the NWF to fund what is termed as 'shadow spending,' allocating funds to corporate loans for large construction projects, among other uses. This leaves approximately $55.8bn in the liquid, cash-like portion of the NWF.
Estimates suggest that this cash-like reserve could be depleted within one to two years if the Russian oil export price falls below $50. Although the NWF is there to cover budget short falls, the Ministry of Finance (MinFin) has been very reluctant to simply finance the deficit from drawing on the liquid part of the fund and has instead worked hard to increase revenues and tapped the Russian Finance Ministry’s OFZ treasury bills market and the some RUB17bn of liquidity in the banking sector by selling bonds.
The federal budget deficit was RUB3.2 trillion ($358bn) at the end of 2023, or 1.9% of GDP, just under the budget forecast, but more than the 1% of GDP Russian Finance Minister Anton Siluanov predicted in December when oil tax revenues began to surge.
Notable the deficit was also well in excess of the $55bn available in the liquid part of the NWF, however, with its other sources of funding available, especially the pool of liquidity in the bank sector, MinFin is confident that there is enough in the fund to cover budget deficits for several years.
Nevertheless, in 2024, Russia is expected to continue depleting the NWF if the Urals oil price remains below $73, a figure roughly consistent with a Brent crude oil price of around $85.
68 RUSSIA Country Report February 2024 www.intellinews.com