Russia's dwindling emergency funds and looming economic crisis
6:17 AM EDT, June 10, 2024
Russian money set aside in the so-called National Welfare Fund is dwindling rapidly. The pool of money in the fund designated for crises is decreasing. The Kremlin has revealed how it will allocate these funds this year.
The National Welfare Fund was meant to be a buffer to mitigate the effects of the Russian economy's dependence on volatile hydrocarbon revenues. Surpluses from oil and gas sales (above the set thresholds - ed. note) are supposed to go to a special fund, explained in an interview with money.pl by Kamil Lipiński from the Polish Economic Institute. Meanwhile, Russia is increasingly dipping into these reserves.
As we wrote on money.pl at the end of January, more than two years of the war conducted by Russia have resulted in the pool of money in the crisis fund dwindling by nearly half to 334 billion rubles.
The independent Russian news portal Meduza estimated that, at current spending levels and falling oil prices, the funds could be exhausted within the next two years.
The First Deputy Head of the Ministry of Economy, Ilya Torosov, told Vedomosti that the government plans to draw another trillion rubles.
Kommersant reported in February that the fund's investments would total 59 billion rubles. By the end of 2023, more than 73 billion rubles had been spent from the National Welfare Fund.
Where the funds will be allocated in 2024:
- Construction of an ethane-containing gas processing complex in the port of Ust-Luga – 27 billion rubles;
- Development of aircraft production – 19 billion rubles (the government planned for Rostec to receive funds, which would issue 15-year bonds at a preferential interest rate of 1.5% annually);
- Preferential leasing of aircraft, watercraft, and buses – 7 billion rubles (GTLK project);
- Construction of the Kazan-Yekaterinburg road – 5 billion rubles (by Avtodor);
- Housing projects and municipal services – 2 billion rubles (through the Territorial Development Fund).
As highlighted by Kommersant, this is the first time the deputy minister has revealed where 59 billion rubles will be spent. It was not specified where the remaining funds would be allocated.
