Bloomberg announced Putin’s desire to save the NWF funds “for a rainy day”

by time news

The size of Russia’s National Wealth Fund (NWF) has reached a record level thanks to growing revenues from oil and gas, and President Vladimir Putin wants to save this additional funds for a “rainy day”, Bloomberg reported, citing officials close to the government.

According to the interlocutors of the agency, after the approval of spending of $ 35 billion from the NWF on infrastructure projects, the head of state ordered the government to limit further spending. The volume of the NWF as of October 1, according to the Ministry of Finance, amounted to 13.9 trillion rubles, or 12% of the projected GDP for 2021, while a month earlier it exceeded 14 trillion rubles.

“Lean attitude towards oil revenues is a huge plus for Russia’s attractiveness to foreign portfolio investors,” said Elina Rybakova, deputy chief economist at the International Institute of Finance in Washington.

Bloomberg clarifies that, according to the government’s forecast, the volume of the NWF in 2024 will exceed $ 300 billion against $ 190.5 at the moment. Additional funds are needed “to reduce the long-term fiscal and macroeconomic risks that could arise from the energy transition,” as the shift from oil and gas to low-carbon energy sources in the main consumer markets could deal a serious blow to Russia, the Finance Ministry said.

On October 1, Putin instructed the government to consider the feasibility of raising the threshold from 7% to 10% of GDP at which the NWF can be spent. As previously reported by Vedomosti, the Ministry of Finance included the initiative in the draft “Main directions of tax, budget and customs tariff policy for 2022-2024.” to “reduce the long-term budgetary risks associated with the energy transition.”

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