Page 74 - RusRPTOct20

the strengthening of the euro against the dollar has increased the fund in dollar terms. Small amounts have also been transferred from the fund this year to cover Russia's general government deficit. The National Welfare Fund was last equal to or larger at the end of 2008 and early 2009, when its size was as high as $225bn.
Of the fund’s assets, just over $119bn is in highly liquid bonds of highly rated countries. The rest of the funds have been invested, for example, in deposits from the Russian Development Finance Institution (VEB) ($7.8bn) and other items designated by the Russian government. The April acquisition of a majority stake in Sberbank is the fund’s largest ($34.9bn) single investment ( BOFIT Weekly 2020/17​ ). These funds are intended to contribute to the long-term growth prospects of the Russian economy.
The foreign exchange and gold reserves of the Central Bank of Russia have also grown clearly this year, although the growth of the reserve has continued almost continuously since the beginning of 2017. During August, foreign exchange and gold reserves reached as much as $600bn, reaching $594bn at the end of August. The previous peak was in August 2008, when the reserve rose to $598bn. The growth of the reserve has been facilitated by e.g. the rise in the price of gold, and at the end of August, gold accounted for about 24% of the total reserve. Russia has the world's fourth largest foreign exchange and gold reserves after China ($3,308bn at the end of August), Japan ($1,399bn) and Switzerland ($1,014bn).
An interesting feature of Russia’s fiscal policy this year is that it gives top priority to the task of protecting accumulated government reserves, the National Welfare Fund (NWF). The government and the Kremlin have clearly decided against a massive draw on NWF, even though the prime objective of the Fund was to support the budget at times when its revenue came under pressure due to falls in crude oil prices. Instead, a search for other sources of funding for arising budget deficits has led authorities to agree to a significant rise in the volume of domestic public debt. A planned spike in state borrowings appears set to become the major source of funding for this year’s and future fiscal deficits, says ​BSC Global Markets​ chief economist Vladimir Tikhomirov.
74 ​RUSSIA Country Report​ October 2020 ​ ​www.intellinews.com