Yuri Kobzar14:41, 16.01.25

The Russian National Welfare Fund is the excess profits from oil and gas exports that the Kremlin has been accumulating for decades without spending it anywhere.

Last year, Russia spent almost a quarter of the liquid reserves of the so-called National Welfare Fund (NWF) , that is, excess profits from oil and gas exports accumulated during the first 20 years of Vladimir Putin’s rule, Bloomberg writes , citing data from the Russian Finance Ministry.

It is noted that in nominal figures, the total size of the Russian National Welfare Fund last year remained almost unchanged and amounted to about 12 trillion rubles (117 billion dollars). However, the situation looks different if we take into account only cash reserves and marketable securities, that is, highly liquid assets that can be easily used to pay current expenses. These assets decreased by 24% last year and amounted to 3.8 trillion rubles as of January 1 of this year.

Overall, during the full-scale war, the highly liquid assets of the National Welfare Fund decreased by 57%: before the invasion, they amounted to 8.9 trillion rubles.

As Bloomberg notes, Russia’s National Welfare Fund is under pressure due to increased budget expenditures related to military needs. The Russian Finance Ministry had to spend 1.3 trillion rubles from the National Welfare Fund to cover the budget deficit last year.

At the same time, part of the NWF is made up of bonds issued to pay for large-scale infrastructure projects. Simply put, these are promissory notes that will be repaid at some point in the future if all goes well. According to Bloomberg calculations, the volume of such bonds in the NWF increased by 50% last year, and has quadrupled since the beginning of 2022.

Bloomberg notes that, according to calculations by the Russian Central Bank, there is a potential scenario of the complete depletion of the National Welfare Fund as early as 2025. This will happen with a “significant deterioration in external conditions” and a collapse in oil prices.

(c)UNIAN 2025