National Welfare Fund Drained at Record Rate
By the beginning of 2026, the liquid part of the National Welfare Fund may be zeroed out
The Finance Ministry reported that in May the volume of the National Welfare Fund (NWF) decreased by 96.5 billion rubles, to 11.69 trillion. Although in dollar equivalent it grew to 148.7 billion.
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These statistics in themselves say little. Some 96 billion compared to trillions of rubles. However, the dynamics of the depletion of the liquid part of the National Welfare Fund raises real concerns among domestic economists.
The National Welfare Fund was created on the initiative of the Russian Ministry of Finance in 2008. It receives part of the income from the sale of oil and gas - if the price of energy is higher than planned. So to speak, this is how it lives.
The liquid part of the National Welfare Fund allows the state to spend funds at any time – this is why it occupies an important place in the structure of the Fund.
As we have already said, the volume of the liquid part has also decreased and amounts to 2.8 trillion rubles.
- How can we estimate this amount, is it large or small? - we ask Igor Nikolaev, chief researcher at the Institute of Economics of the Russian Academy of Sciences.
- From the point of view of an ordinary citizen, it is difficult to feel these trillions, - he explains. - In our real life, the scale of measurements is completely different. And here, zeros, zeros... It seems that the financial "stash" will never run out. But everything is known in comparison.
The Federal Budget deficit for the current year has now been revised. Initially, it was forecast at 1.2 trillion rubles (0.5%) of GDP. And today it is expected at 3.8 trillion - 1.7% of GDP.
- What does the budget deficit have to do with it?
- The National Welfare Fund was initially created to largely patch up holes in the budget and cover the deficit. 3.8 trillion is one trillion more than what remains in the liquid part of the National Welfare Fund.
As you can see, there isn’t that much money in our “piggy bank”.
As of December 1, 2024, the liquid part was 5.8 trillion rubles. In six months, it has "lost weight" by 3 trillion. Simple arithmetic shows that if current trends continue, the Fund may be completely zero by the beginning of 2026. This is a very real threat.
- If this happens, what can we expect in the economy? After all, the financial safety net represented by the National Welfare Fund has saved the country so many times in various crisis situations...
- We will have to cut back on federal budget expenditures. I repeat: zeroing out is quite realistic.
- But can some measures be taken to fill the National Welfare Fund?
- At the extended session of the Finance Ministry board, a proposal was made to review the Budget Rule, reduce the cutoff price per barrel of oil and send it to the National Welfare Fund. Currently, funds are sent there if a barrel of oil costs more than $60. But let's say a cutoff price of $40 is proposed. Then the fund will start to replenish.
But in that case we will have to reduce our current financial expenses. There are no miracles in the world, we will have to "cut back" in some things, the choice is limited.
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