Pandemic ‘so severe Russia should use half its National Wealth Fund’

28 Apr 20

The Russian government has been urged to spend half of its National Wealth Fund of saved oil and gas revenues to deal with the Covid-19 crisis.

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The secret wealth of Russian president Vladimir Putin is at the centre of the revelations uncovered in the Panama Papers

Russian president Vladimir Putin

 

Chairman of the country’s national audit office Alexei Kudrin said the extremity of the current justifies the use of the fund, which the government believes should be deployed more cautiously and last for at least three years.

“You can’t skimp on 2020, when there will be a peak [in spending demands],” said Kudrin in a statement released by the audit office.

He said that after the NWF has been exhausted, the government can finance its spending by borrowing, but “this year the severity of the crisis is such that you need to spend more from the fund”.

“If that will be half or a little more than half, that’s not scary. If these funds are [only] enough for two years, given the severity of the crisis, that is also not scary.”

Kudrin was finance minister from 2000 to 2011, and oversaw the creation of the NWF in 2008.

It receives funds from investments made with taxes and duties on the production and export of oil and gas, and as of March 2020 contained about 12.2trn rubles ($157.2bn).

So far, Russia has only committed about $40bn (2.8% of its GDP – much less than many other countries) to measures fighting the health and economic impacts of Covid-19, with that money set to come from the NWF.

In an interview with Russian state television, current finance minister Anton Siluanov said the budget is under increased pressure because of the “double effect” of the coronavirus and the recent collapse in oil prices.

“Of course, it’s difficult for the country, but nevertheless we have built up safety margins,” Siluanov said.

“There are enough reserves to overcome the situation, and we are actively working towards a solution to counteract the negatives that we face.”

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