Aggregate volume national welfare Fund and Reserve Fund — the government’s two “jugs” for March has increased in dollar terms by 2.1%. This is the maximum growth since August 2014, when funds increased by 2.3%, follows from data of the Ministry of Finance and .
NWF increased in March by 2.6% and Reserve Fund by 1.4%. Since the beginning of the year, the total size of sovereign wealth funds rose 1.7%. The contingency Fund at 1 April amounts to USD 50.6 billion (3.4 trillion rubles), NWF — $73,18 billion (4.9 trillion rubles).
But in rouble terms the amount of the two funds declined by 7.6 and 8.7 percent, respectively (collectively — 8.1%), to 8.4 trillion rubles. Such dynamics is due to March to the strengthening of the ruble, which became the second best currency in emerging markets in March after Brazil’s real, according to Bloomberg. For the period 29 February to 31 March 2016, the dollar fell against the ruble by 11% to 66,9 75,19 rubles/$1, follows from the data Bloomberg terminal.
Exchange differences due to the growth of “pod” in dollar terms. There are funds in US dollars, euros and pounds sterling: consequently, the movement of exchange rates of these currencies affects the size of sovereign wealth funds. In addition, due to the revaluation of assets: the portion of funds invested, for example, in foreign bonds, the market price of which varies.
On April 1, the Reserve Fund consisted of $22.7 bn, €20.3 billion and 3.4 billion pounds. NWF funds with the Bank of Russia on deposits in Vnesheconombank, in debt obligations of foreign countries, of securities of Russian issuers and banks VTB and “Gazprombank” (linked with infrastructure projects), in preferred shares of credit institutions amounted to $33 billion, €20.8 bn, £ 3.8 billion and 751 billion rubles.
Since then, as it was cancelled a fiscal rule, the funds are not replenished, can occur only two things — spending and revaluation, explains chief economist for Russia and CIS at ING Commercial Banking Dmitry Polevoy. A fiscal rule was valid from 2013: revenues from the mineral extraction tax, export duties on oil, gas and petroleum products in excess of the price of oil predicted values were distributed between a Reserve Fund and NWF. The portion of the excess revenue was going into the Reserve Fund, and when it reaches the threshold of 7% of GDP to half of the money could go to infrastructure projects, the rest in the NWF. Thus, when oil prices were high, the state has accumulated “safety cushion” that could be used to Fund current obligations in the event of a fall in hydrocarbon prices.
In December 2015, the Central Bank warned that the funds the two funds can be fully used by the beginning of 2019. In 2016 it is planned to use 2,137 trillion rubles from the Reserve Fund to cover the budget deficit, it follows from the Bank. In this case, by the end of 2016 the amount of the Reserve Fund and national welfare Fund can be 5,717 trillion roubles. “If to assume that in 2017-2018, the amount of funds allocated from the funds to balance the Federal budget, will be the same as in 2016, the total Reserve Fund and national welfare Fund will be spent almost entirely by the beginning of 2019”, — stated in the review of the Central Bank. In January, Finance Minister Anton Silanov stated that without the introduction of fiscal optimization of sovereign wealth funds could be depleted in the current year.