NWF National Welfare Fund of the Russian Federation

Main article: Russian economy

History

2024

The size of the NWF 12.3 trillion rubles or 6.4% of GDP

The National Welfare Fund of Russia as of July 31, 2024 is 12.3 trillion rubles, or about 6.4% of GDP.

A significant part of the funds is placed in stocks and bonds, and among the liquid part only 4.66 trillion rubles or 54 billion dollars at the current exchange rate, which is 2.4% of GDP.

The liquid part is represented in the form of gold - 298.9 tons and 226.5 billion yuan (approximately $31.6 billion).

For the first 7 months, the return on investments placed in foreign currency amounted to only $68.3 million, which is about 0.2% per annum for the total amount of funds in foreign currency, taking into account gold and debt obligations in foreign currency for $5 billion, and excluding gold - 0.33% per annum, i.e. investments do not generate income at all (sanctions + restrictions on profitable instruments).

Shares contain 4.9 trillion rubles of NWF assets, including:

• ordinary shares of Sberbank - 3.3 trillion rubles;
• preferred shares of JSCo Russian Railways - 722.1 billion rubles;
• preferred shares of VTB Bank (PJSC) - RUB 214 billion;
• preferred shares of the Bank GPB (JSC) - 165 billion rubles;
• ordinary shares of JSC ДОМ.РФ - 137 billion rubles;
• ordinary shares of PJSC Aeroflot - RUB 128.2 billion;
• ordinary shares of VTB Bank (PJSC) - 115 billion rubles;
• ordinary shares of JSC GTLK"" - 58.3 billion rubles;
• preferred shares of JSC Atomenergoprom - 57.5 billion rubles;
• preferred shares of Rosselkhozbank JSC - 25 billion rubles.

The bonds contain 1.7 trillion rubles, including:

• "Russian Highways" - 469.3 billion rubles;
• LLC "NLC-Finance" - 287 billion rubles;

• State Corporation Rostec - 247.3 billion rubles;
• Aviakapital-Service LLC - 175.4 billion rubles;
• PPK "Territory Development Fund" - 132.4 billion rubles;
• JSC "GTLK" - 142.8 billion rubles;
• LLC VC"" - 60 billion rubles;
• Infrastructure Investments-4 LLC - 4 billion rubles;
• other Russian issuers - 16 billion rubles, 1.8 billion dollars and 3 billion Chinese yuan.

Another 689.4 billion in deposits with VEB, 38.4 billion in subordinated deposits and $3 billion in bonds of foreign countries.

1 trillion rubles are allocated from the NWF for 2024. Where the money will go

The Government of the Russian Federation approved the allocation of more than 1 trillion rubles from the National Welfare Fund (NWF) for 2024. The main part of the funds will be used to finance self-sustaining infrastructure projects, First Deputy Minister of Economic Development Ilya Torosov said on June 10, 2024.

The largest amount, 676 billion rubles, will be invested in two large projects. One of them is the construction of a complex for the processing of ethane-containing gas in the port of Ust-Luga, for which 392 billion rubles were allocated from the NWF. The joint project of Gazprom and Rusgazdobych provides for the processing of 45 billion cubic meters. m of gas per year and the production of 13 million tons of liquefied natural gas (LNG), as well as other valuable products.

The government approved the allocation of more than 1 trillion rubles from the NWF

According to the first deputy minister, the second significant project is the expansion of aircraft production. 284 billion rubles will be allocated for these purposes. In January 2024, the government approved the allocation of 283.3 billion rubles for the program for the development of the aviation industry until 2030. These funds will be received by Rostec, which will issue bonds for 15 years at a preferential rate of 1.5% per annum. The program involves the production of more than 600 aircraft for domestic airlines.

Torosov noted that in addition in 2024 it is envisaged to allocate more than 100 billion rubles for preferential leasing of aircraft, water vessels and buses, as well as 77 billion rubles for the construction of the road Kazan - Yekaterinburg through "." As Avtodor part of this project, a new section of the Vostok M-12 route from to Kazan Yekaterinburg with a length of 275 km is being built, which will be completed in 2024.

He stressed that it is planned to allocate 30 billion rubles for housing and communal services projects through the Territory Development Fund (FRT). These funds will be used to modernize and restore communal infrastructure in new constituent entities of the Russian Federation, including overhaul of apartment buildings and landscaping.^[1]

2023

The volume of the fund is 11.8 trillion rubles

In December 2023, Russian Finance Minister Siluanov disclosed the amount of funds of the NWF at the moment: 11.8 trillion rubles, free funds - 4.7 trillion rubles.

Allocation of funds to Russian airlines for the purchase of Western aircraft

Aeroflot, Ural Airlines and iFly have agreed with the Ministry of Transport of the Russian Federation to allocate funds from the NWF to buy out aircraft from Western lessors. This became known at the end of August 2023. Read more here.

280 billion rubles from the NWF are allocated to the project of the Russian MS-21 aircraft

At the end of July 2023, Russian Finance Minister Anton Siluanov spoke about the allocation of 280 billion rubles from the National Welfare Fund (NWF) for the project of the domestic MS-21 liner. He clarified that money from the NWF is directed to large technological or infrastructure projects that are "most important for the country's technological independence." Read more here.

Purchase of VK bonds for 60 billion and NLC-Finance - for 35 billion rubles from the fund

In April 2023, the Ministry of Finance of the Russian Federation invested 60 billion rubles from the National Welfare Fund in VK bonds. Almost 35 billion rubles went to the purchase of bonds "NLC-Finance" - the "daughter" of the insurance company NSC, created in 2022 to insure the risks of the aviation industry and air carriers in connection with the sanctions of the United States and their allies.

In April, 4.25 billion yuan and 6 tons of gold worth 83 billion rubles were sold to close the budget deficit of the Russian Federation

Of the funds of the NWF in April 2023, 4.25 billion yuan and 6 tons of gold were sold in the amount of 83 billion rubles. to finance the budget deficit of Russia - the Ministry of Finance of the Russian Federation.

The volume of the fund is 11.1 trillion rubles, the liquid part is 6.44 trillion or $85.5 billion

The volume of the NWF of Russia as of March 1, 2023 is 11.1 trillion rubles (7.4% of GDP). The volume of liquid assets in the structure of the NWF is 6.44 trillion rubles or 85.5 billion dollars (4.3% of GDP).

Since January 1, 2023, the NWF has grown by almost 700 billion rubles, of which the exchange rate revaluation of the currency component amounted to 504 billion rubles due to the fall of the ruble. The exchange rate revaluation of the ruble component also influenced almost 340 billion rubles.

So Sberbank shares are estimated at 1.92 trillion compared to 1.59 trillion at the end of 2022, and Aeroflot shares - 66.8 billion against 58 billion. Russian Railways prefusions - 467 billion, ДОМ.РФ shares - 50 billion, GTLK shares - 58.3 billion, Ural Airlines bonds - 2.3 billion, Siberia Airlines bonds - 11.8 billion, preferred shares of credit institutions - 329 billion and subordinated deposits of VTB and GPB - 138.4 billion, securities of Russian issuers on infrastructure projects - 584 billion

Collectively, for the above items, the change and revaluation for two months is near zero. There is also a deposit in VEB for 650 billion rubles.

In total, the currency and exchange rate revaluation is estimated at almost 850 billion rubles for two months in plus, i.e. without taking into account the growth of shares of Sberbank, Aeroflot and the fall of the ruble, the NWF would have decreased by 140-150 billion rubles.

As for the currency component, 10.4 billion euros are in euros, 300 billion in yuan (minus 9 billion in two months), and 539 tons (minus 15 tons) in gold. All other positions were eliminated.

The currency position in pounds and yen was liquidated in December 2022, and the dollars were disposed of in July 2021. Until February, almost all foreign exchange assets of the NWF were stored in dollars, euros and pounds, where in dollars and euros almost 90%. Yuan first entered in February 2021.

As of March 1, 2023, the liquid currency part is estimated at $32 billion in gold, $43.3 billion in yuan and $11.1 billion in euro positions. Total $86.4 billion or 6.5 trillion rubles, and excluding gold - 4.1 trillion rubles.

The Ministry of Finance in February 2023 sold yuan and gold for 131.7 billion rubles. The main source of financing the deficit is cash in Russian banks.

The first sale of gold - 3.6 tons - to cover the budget deficit

The Ministry of Finance of Russia in January 2023 for the first time sold a small volume of gold (3.6 tons) from the National Welfare Fund (NWF) in order to cover the budget deficit. Previously, mainly the Ministry of Finance bought precious metal.

2022

Reduction in the size of the fund to $148.35 billion or 10.43 trillion rubles after record costs to pay off the budget deficit of the Russian Federation

The Russian government spent a record amount in history from the National Wealth Fund to reduce the federal budget. In December 2022, the fund's liquid assets fell by $37.3 billion, the currencies of countries declared "unfriendly" by the Russian authorities were almost completely spent. The total size of the fund decreased to $148.35 billion, or 10.43 trillion rubles.

The Russian Ministry of Finance claims that it sold the Central Bank foreign currency from the NWF, which it converted into rubles - 2.412 trillion rubles. But we are talking about currencies that are frozen by sanctions and to which neither the Ministry of Finance nor the Central Bank have access, Deutsche Bank analysts wrote in a review of Russia. The whole transaction was virtual. "The Central Bank on paper moved frozen funds from the reserve account of the Ministry of Finance to its reserve account and at the same time issued rubles so that the Ministry of Finance could use them," the bank said in a review.

New asset structure: 60% yuan and 40% gold

In December 2022, it became known that the Ministry of Finance of the Russian Federation decided on a new structure of the National Welfare Fund: the euro, yen and pounds will be excluded from its composition. The new structure of the NWF is now as follows: up to 80% of the fund is allowed to invest in yuan, up to 40% - in gold.

Previously, the NWF was supposed to consist of 40% of the euro, 30% of the yuan and 5% of the pound sterling and yen. Another 20% should come from gold.

Mishustin ordered to send 1 trillion rubles from the NWF to cover the budget deficit

In October 2022, Prime Minister RFMikhail Mishustin signed an order to allocate 1 trillion rubles from the National Welfare Fund (NWF) to cover the federal budget deficit. Read more here.

The Accounts Chamber proposed to exclude the currencies of hostile countries from the NWF portfolio

In July 2022, the Accounts Chamber proposed to the Ministry of Finance of the Russian Federation to exclude from the portfolio of assets of the NWF the currencies of countries that have imposed sanctions against Russia. Experts urge to invest in ruble assets, yuan and gold.

Sharp reduction to 10.7 trillion due to record strengthening of the ruble

Since the beginning of 2022, the foreign exchange assets of the National Welfare Fund have brought 2.8 trillion rubles of loss due to changes in rates, the Ministry of Finance reported on July 5, 2022.

Only in June, the size of the NWF "collapsed" by 1.7 trillion rubles, or 14%, despite the fact that the real expenses from the fund turned out to be 31 times less: the government allocated 50 billion rubles for the additional capitalization of Gazprombank and 4 billion to the housing and communal services fund.

As well as €50.9bn, the Finance Ministry holds £5.5bn, 797bn Japanese yen, 309.72bn yuan and 554.9kg of gold. But even assets that did not fall under the sanctions turned out to be unprofitable for the government: the yuan has fallen in price against the ruble by 26% since the beginning of the year. The price of gold in dollars practically did not change, but in rubles it rolled down along with the exchange rates, which brought losses of 609 billion rubles.

The total loss on the balances of funds in foreign currency and in gold with the Bank of Russia for the period from January 1 to June 30, 2022 amounted to 3.449 trillion rubles, the Ministry of Finance reported. The total size of the NWF decreased to 10.774 trillion rubles - the minimum since March 2020.

Growth to 12.47 trillion or $197.725 billion or 9.4% of GDP

The volume of the National Welfare Fund (NWF) as of June 1 amounted to 12 trillion 475.932 billion rubles (equivalent to $197.725 billion) or 9.4% of GDP predicted for 2022, the Ministry of Finance of the Russian Federation said. In May, the fund's volume grew by 1 trillion 470.6 billion rubles.

The size of the NWF decreased by $273 million to $154.95 or 11 trillion rubles

The volume of the National Welfare Fund of Russia in April 2022 decreased in rubles by 2.047 trillion rubles - to 11.005 trillion, in dollars - by 273 million, to 154.95 billion or 8.3% of the projected annual GDP.

The government will capitalize Gazprombank. Aeroflot, Russian Railways and Dom from the NWF

The government decided to capitalize Gazprombank on 50 billion rubles from the National Welfare Fund (NWF), decisions on support from the fund were also made in relation to Aeroflot, Russian Railways and Dom, said Russian Finance Minister Anton Siluanov.

The government is ready to send up to 1 trillion rubles for the purchase of shares in Russian companies

On March 1, 2022, it became known about the decision of the Government of the Russian Federation to allocate up to 1 trillion rubles for the purchase of shares in Russian companies. To conduct transactions, the Ministry of Finance of the Russian Federation is allowed to attract "ВЭБ.РФ" and specialized financial organizations. Read more here.

Temporary losses due to the collapse in the stock market

The collapse of the Russian stock market in early 2022 amid the crisis in Ukraine hurt the Russian National Welfare Fund, which lost 2 trillion rubles.

From the beginning of February to February 22, 2022, the NWF, where additional oil and gas budget revenues have been stored since 2017, lost 909 billion rubles due to shares purchased in 2020.

The accumulated losses of the NWF for four months of the market collapse are approaching 2 trillion rubles.

2021

The volume of the fund increased by 19.7 billion rubles, to 13.56 trillion rubles

The volume of the National Welfare Fund (NWF) of Russia in 2021 increased by 19.7 billion rubles compared to 2020 and reached 13.56 trillion rubles. This is evidenced by the data of the Ministry of Finance of the Russian Federation, published on January 18, 2022.

In dollar terms, the volume of the NWF in 2021 decreased by $0.76 billion to $182.59 billion. As of January 1, 2022, the fund's volume was 11.7% of GDP projected for 2021. The fund's liquid assets amount to 8.43 trillion rubles, or $113.5 billion, which is equivalent to 7.3% of GDP.

According to the Ministry of Finance, CENTRAL BANK OF THE RUSSIAN FEDERATION 364.6 million rubles, 38.56 billion euros, $4.19 billion, as well as 600.3 billion Japanese yen, 226.72 billion Chinese yuan and 405.708 tons of gold in impersonal form. Another $3 billion is placed in bonds Ukraine on which the country defaulted. ВЭБ.РФ 530.87 billion rubles were placed on deposits in.

ВЭБ.РФ in December 2021 early returned from deposits part of the funds of the NWF placed in 2016-2020. to finance the purchase of wagons in the interests of the Moscow metro (KZhTs-1) for 121.8 million rubles and KZhTs-2 - 164.7 million rubles, as well as the construction of an airport complex in Saratov - 78.1 billion rubles.

At the end of November 2021, Russian President Vladimir Putin signed a law that increased the threshold from 7 to 10% of GDP, in excess of which the savings of the NWF can be directed to investments. The corresponding bill was developed by the Ministry of Finance. As explained in the department, the level of liquid reserve assets had to be increased in order to reduce the long-term risks associated with the energy transition of developed countries to a low-carbon economy, which is expected to lead to a drop in commodity prices by 2030.^[2]

Buying currency

The Ministry of Finance continues to increase the volume of currency buying operations on the Moscow Exchange.

From July 7 to August 5, 296 billion rubles were allocated from the federal budget for these purposes.

The total volume of interventions will grow by 34% compared to June and will become a record from February 2020: in a month, the state will take $4.05 billion from the market turnover, which will go to replenish the NWF.

Daily, the Central Bank in the interests of the government will buy currency for 13.5 billion rubles against 10.5 billion rubles now.

In the coming month, according to the Ministry of Finance, the budget will receive 242 billion rubles of income from oil prices above the "cut-off" bar of the budget rule, which is set at $43.3 per barrel. 54.1 billion rubles of super-planned revenues of the previous month will be added to this amount.

As a result: by the end of July, the Ministry of Finance will send a total of $14.1 billion to the NWF. Operations to fill the fund resumed in January and in the first half of the year amounted to $11.1 billion.

Reduction in the size of the fund to 13.75 trillion rubles

The total size of the NWF decreased in June 2021 from 13.938 trillion rubles (12.1% of GDP) to 13.574 trillion rubles (11.7% of GDP). In addition to foreign currency losses, the Ministry of Finance lost 64 billion rubles on the fall of Sberbank shares and 1.8 billion on investments in Aeroflot.

Financing of the construction of the BAM, Transsib and TsKAD

13.83 billion rubles from the fund went to the capital of Russian Railways for the construction of the BAM and Transsib, which the transport monopoly intends to carry out by prisoners. 0.5 billion rubles from the NWF were allocated to Rosavtodor for the project of the Central Ring Road (TsKAD).

A complete rejection of the dollar

In early June 2021, Russian Finance Minister Anton Siluanov said that the Ministry of Finance would change the structure of the NWF within a month, completely abandoning the dollar. At this time, the share of the dollar in the NWF portfolio is 35%.

The transition to the new structure of the NWF will take place within a month. The agency will get rid of $39.4 billion and half of £8.55 billion by replacing them with investments in euros, gold and the Chinese yuan.

"In dollars - 0%, in euros 40%, in yuan 30%, in gold 20%, in pounds and yen 5% each," Siluanov said.

At this time, Russian ZVRs consist of two parts - the reserves of the Central Bank ($484 billion) and the liquid part of the NWF ($116 billion). Observers assumed that the authorities would transfer "unnecessary" dollars from the NWF to the reserves of the Central Bank, and from there they would transfer to the fund euros ($5 billion), yuan ($17 billion) and gold ($23 billion). The share of the European currency in the NWF should grow from 35% to 40%, the share of the yuan - from 15% to 30%, and 20% of the fund will go to gold.

At the same time, the general structure of the ZVR does not appear to change, as well as the amount of dollars on the balance sheet of the state.

By June 10, 2021, the NWF had already converted $4 billion into yuan and $1 billion into euros, the Ministry of Finance said in a statement, with $35 billion remaining, which has yet to be reduced.

In early July 2021, the Ministry of Finance of the Russian Federation led the structure of the NWF to new standards, the procedure for de-dollarization of the National Welfare Fund was completed.

The share of the American currency in the structure of the NWF is now zero. Previously, the dollar accounted for 35% of the fund.

• euro share increased to 39.7% (previously 35%);
• the share of the yuan is 30.4% (previously 15%);
• the share of gold is 20.2% (previously 0);
• the share of the pound has been reduced to 5% (previously 10%);
• the share of the yen is 4.7% (previously 5%).

13.82 trillion rubles

By May 1, 2021, the size of the National Welfare Fund reached 13 trillion 825.43 billion rubles. This exceeds 12% of the country's projected GDP according to the forecasts of the Ministry of Finance in 2021. They planned to spend the reserves of the main "kubyshka" purely on self-sustaining infrastructure projects, when the size of the NWF will exceed 7% of GDP.

There were many people wishing to receive co-investment from the NWF due to the fact that it is much more profitable than lending to banks. For example, the railway monopolist Russian Railways expects to receive up to 100 billion rubles for the modernization of the Trans-Siberian Railway and BAM. In particular, the monopoly wants to receive funds for the construction of railway exits from Yakutia at a rate of inflation plus 1%, that is, 5-6% per annum. The company asks to pay at least 25% of the total cost, which, depending on electrification, is 350-700 billion rubles.

13.65 trillion rubles

Ministry of Finance Russia confirmed that the National Welfare Fund (NWF) managed by him by February 1, 2021 decreased by about 4 trillion 700 billion. rubles This follows from the departmental report "On the results of the placement of NWF funds for the period from January 1 to 31."

As of February 1, the volume of the NWF amounted to 13 trillion 650 billion rubles (11.8 percent of GDP). At the same time, the amount of liquid (in this case, real) assets of the Fund (funds in bank accounts with the Bank of Russia) is estimated at 8 trillion 876 billion rubles. 

In January, the NWF, due to exchange rate fluctuations (exchange rate revaluation of funds), received an additional 246.3 billion rubles, which is approximately equal to the average monthly deficit of the federal budget. 

The total income from the placement of the Fund's funds (excluding money in accounts with the Central Bank) in permitted financial assets amounted to 1 billion 723 million rubles. Profitability - half a percent per annum.

The NWF continues to increase foreign exchange assets, converting 11 billion 627 million rubles in January (funds returned from VEB deposits) into dollars, euros, and pounds sterling.

2020: Growth to 9.3 trillion rubles due to the devaluation of the ruble

The collapse of the ruble in September 2020, which made the Russian currency the worst in emerging markets and threw up the dollar to highs since March, and the euro to a 4-year peak, turned out to be a "gift" for the Russian government, which stores reserves in foreign currencies.

According to the results of September, the liquid part of the National Welfare Fund - the "oil and gas cubes" of the Ministry of Finance, where raw materials super-profits of the budget were stored for three years - increased by 436 billion rubles, to 9.346 trillion rubles, the agency said on October 7 in a monthly report on the state of sovereign funds.

The NWF was able to increase in size, even though the Ministry of Finance spent money from it. During the month, $340.4 million, 288.3 million euros and 58.1 million pounds were withdrawn from the fund. The Ministry of Finance converted this currency into 57.2 billion rubles, which were used to cover the budget deficit.

Devaluation profits not only blocked these expenses, but also turned out to be almost 9 times more. In total, the Ministry of Finance earned 493 billion rubles per month on the growth of exchange rates.

Since the beginning of the year, the exchange rate revaluation of the NWF has brought the government 2.1 trillion rubles - the "currency pot" has risen in price by so much as a result of the largest devaluation of the ruble since 2014.

2019

Dynamics of foreign currency deposits growth

The Bank of Russia publishes the main data in the banking sector reviews (monthly) and the Treasury (daily).

As of August 2019, in addition to the NWF at the ~ of 8 trillion rubles. rubles, including ~ 7 trillion in foreign currency, and foreign currency at the ~ of 2 trillion, bought by the Central Bank, but not yet credited to the NWF, the budget has huge balances on ruble accounts in the Central Bank and banks. In total, an additional 9 trillion rubles ~. Over the 3 years, this amount has grown 2 times from 4-5 trillion.

The budget surplus remains - more than 0.4 trillion. in July, of which half 0.2 trillion. went into foreign currency for the NWF.

NWF Funds Utilization Plan for Export Credits

In July 2019, the discussion about the fate of excess profits from the sale of oil is gaining momentum in the corridors of power. It is known that the Government is preparing to print the National Welfare Fund (NWF) for the provision of export loans. Now exports are supported through the system of the Russian Export Center and through the mechanisms of export state guarantees for military-industrial complex products. Accordingly, the funds of the NWF are not available for these purposes. According to the calculations of the ВЭБ.РФ, which advises ministers, the remaining free funds of the NWF in 2020 at current oil prices will reach 9% of GDP. In this regard, Igor Shuvalov's analysts propose to increase the country's GDP by 1% by spending about 1.5-2 trillion rubles from the NWF, which will simultaneously strengthen the ruble by 10%.

The position of the Ministry of Finance on the NWF issue has always been moderate and allowed partial spending of these reserves for infrastructure purposes. The Ministry of Economy advocates tougher restrictions, but the Central Bank is seriously concerned about the expansion of spending items of the NWF. The proposed changes will greatly affect the current budget rules, which are the basis of the current monetary policy model. So far, the current mandate of the fund allowed only two ways to invest its funds: in foreign assets of this class, in which international reserves of the Central Bank are placed and provide loans to Russian structures when the level of the NWF reaches above 7% of GDP.

Now the amendments to the bill adopted by the Government allow granting state export loans from the "excess" funds of the NWF. It is necessary to make a reservation that the Ministry of Finance is more likely to support the position of ВЭБ.РФ than the Bank of Russia, since the rapid support for GDP growth through export loans will exceed the rate of return on long-term investments of the NWF within the country. Investments in exporters will accelerate GDP growth, which, under current conditions, tend to zero. In such a situation, the Central Bank may increase the accumulation threshold to 10% in order to receive a deferral for spending funds from the NWF. This will not overturn the decision, but will allow the regulator to win one fiscal year to complete it on the old principles of monetary policy.

Notes