The Russian National Wealth Fund is

Russia Russia (, , ), or the Russian Federation, is a List of transcontinental countries, transcontinental country spanning Eastern Europe and North Asia, Northern Asia. It is the List of countries and dependencies by area, largest country in the ...

sovereign wealth fund A sovereign wealth fund (SWF), sovereign investment fund, or social wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such ...

. It was created after the

Stabilization Fund of the Russian Federation The Stabilization fund of the Russian Federation (russian: Стабилизационный фонд Российской Федерации, Stabilizatsionny fond Rossiyskoy Federatsi) was a sovereign wealth fund established based on a resoluti ...

was split into two separate investment funds on 30 January 2008.

Fund structure

The two funds are the Reserve Fund, which is invested abroad in low-yield securities and used when oil and gas incomes fall, and the National Wealth Fund, which invests in riskier, higher return vehicles, as well as federal budget expenditures. The Reserve Fund was given $125 billion and the National Wealth Fund was given $32 billion. The fund is controlled by the

Ministry of Finance A ministry of finance is a part of the government in most countries that is responsible for matters related to the finance. Lists of current ministries of finance Named "Ministry" * Ministry of Finance (Afghanistan) * Ministry of Finance and Eco ...

. One of the fund's main responsibilities is to support the Russian

pension A pension (, from Latin ''pensiō'', "payment") is a fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement from work in the form of periodic payments ...

system.Ukraine bailout could derail Putin's drive to boost Russian economy
''

Financial Times The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nik ...

'' (18 December 2013)

Overview

The National Wealth Fund will receive funds from investment returns or any excess funds that the Reserve Fund produces. The Reserve Fund is capped at 10% of Russian

GDP Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is often ...

, and any funds over that will be given to the Wealth Fund. The fund also has accumulated $72.71bn (as of 1 September 2016) from taxes and duties it collects on the production and export of oil and gas. According to the Russian Ministry of Finance, the foreign debt securities the fund can invest in must have

credit rating A credit rating is an evaluation of the credit risk of a prospective debtor (an individual, a business, company or a government), predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting. ...

s of AA- or higher by Fitch or

Standard & Poor's S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities. S&P is con ...

, or a rating of Aa3 by

Moody's Moody's Investors Service, often referred to as Moody's, is the bond credit rating business of Moody's Corporation, representing the company's traditional line of business and its historical name. Moody's Investors Service provides international ...

. Despite this, the fund agreed to buy (on 17 December 2013) $15 billion of Ukrainian

Eurobonds Eurobond may refer to: * Eurobond (external bond) A eurobond is an international bond that is denominated in a currency not native to the country where it is issued. They are also called external bonds. They are usually categorised according t ...

, despite the fact that

Ukraine Ukraine ( uk, Україна, Ukraïna, ) is a country in Eastern Europe. It is the second-largest European country after Russia, which it borders to the east and northeast. Ukraine covers approximately . Prior to the ongoing Russian inv ...

had lower credit ratings at the time.Russia cuts Ukraine gas price by a third

BBC News BBC News is an operational business division of the British Broadcasting Corporation (BBC) responsible for the gathering and broadcasting of news and current affairs in the UK and around the world. The department is the world's largest broadca ...

(17 December 2013)Ukraine to issue Eurobonds; Russia will purchase $15 bln, says Russian finance minister

Interfax-Ukraine The Interfax-Ukraine ( uk, Інтерфакс-Україна) is a Kyiv-based Ukraine, Ukrainian independent news agency founded in 1992. The company does not belong to the Russian news corporation Interfax Information Services. The company pub ...

(17 December 2013) The fund stands out from other global funds with it gathering investments into the national economy itself instead investing everything overseas, so it can provide a boost to the slow modernization of Russian infrastructure in a time of otherwise anemic investment. Other countries like

Indonesia Indonesia, officially the Republic of Indonesia, is a country in Southeast Asia and Oceania between the Indian and Pacific oceans. It consists of over 17,000 islands, including Sumatra, Java, Sulawesi, and parts of Borneo and New Guine ...

are following the Russian example in running a National Wealth Fund it is reported in 2020. Of course, because of a lack of a real "hard currency" reserve, the fund can quickly lose value in a case of internal crisis. The Russian National Wealth Fund was merged in 2017 with the remaining of Russia’s sovereign Reserve Fund. The Reserve fund was built up over years with profits from oil exports but amid low

oil price The price of oil, or the oil price, generally refers to the spot price of a barrel () of benchmark crude oil—a reference price for buyers and sellers of crude oil such as West Texas Intermediate (WTI), Brent Crude, Dubai Crude, OPEC Refe ...

prices was emptied by the end of 2017 and ceased to exist.

Size of the fund and historic numbers

Source by the Ministry of Finance of Russia:

Sanctions

On February 21, 2022, Russian President Vladimir Putin recognized the

Luhansk People's Republic The Luhansk or Lugansk People's Republic (russian: Луга́нская Наро́дная Респу́блика, Luganskaya Narodnaya Respublika, ; abbreviated as LPR or LNR, rus, ЛНР) is a disputed entity created by Russian-backed ...

and

Donetsk People's Republic The Donetsk People's Republic ( rus, Донецкая Народная Республика, Donetskaya Narodnaya Respublika, dɐˈnʲetskəjə nɐˈrodnəjə rʲɪˈspublʲɪkə; abbreviated as DPR or DNR, rus, ДНР) is a Territorial ...

as independent from

, a move which prompted several countries to impose

economic sanctions Economic sanctions are commercial and financial penalties applied by one or more countries against a targeted self-governing state, group, or individual. Economic sanctions are not necessarily imposed because of economic circumstances—they may ...

on Russian banks, individuals and companies. On February 22, 2022, United States President Joe Biden announced new restrictions on activities involving the National Wealth Fund. On October 10, 2022, Prime Minister Mishustin ordered to allocate 1 trillion rubles from the National Welfare Fund to cover the budget deficit.

References

{{Reflist Politics of Russia Economy of Russia Energy in Russia

Russian Russian(s) refers to anything related to Russia, including: *Russians (, ''russkiye''), an ethnic group of the East Slavic peoples, primarily living in Russia and neighboring countries *Rossiyane (), Russian language term for all citizens and peo ...

Russian entities subject to the U.S. Department of the Treasury sanctions

Fund structure

Overview

Size of the fund and historic numbers

Sanctions

See also

References