Money of the National Welfare Fund. Ask the IMF and do it your way.
In those rare cases when our financiers and economists, who are not at all deprived of real power, do not follow the advice of outsiders from the West, they always for some reason want to express special gratitude to them.
In Russia, it is customary to criticize the authorities for uncontrolled spending. This is when it comes to large-scale projects like the reconstruction of the BAM and Transsib, the construction of the Kerch Bridge or another high-speed highway Moscow - St. Petersburg. We continue to complain about the lack of investment activity of the business, both domestic and foreign, but as soon as it comes to large-scale government investments, many also do not like it.
Meanwhile, it seems to us that in our country there is more reason to invest in something real in any case than to freeze funds in foreign assets. No matter how high quality and reliable they may seem. Last Friday, this kind of recommendation was made to Russia from the International Monetary Fund (IMF). The Fund said so directly that “the Russian authorities should not spend the funds of the National Wealth Fund (NWF) on investment projects — it is better to continue investing them in high-quality foreign assets.”
The IMF expert opinion says it all very specifically:
The IMF councils, of course, are difficult to compare with US and European sanctions, but they are very similar to some kind of ultimatum. Is it any wonder that at a press conference in front of the Russian business press quite loyal to the IMF, the head of the mission of the Foundation for Russia, James Roaf, tried to soften the overall negative impression.
For a start, he admitted that the IMF understands Russia's desire for financial independence, for which he, of course, a special thank you. But, in his own words, the Russian financial authorities "would hardly have had the sense of investing them (NWF funds) in the domestic economy." James Roaf said that “they see arguments in the IMF in favor of investing the fund’s money in long-term assets abroad.
To all appearances, the IMF regularly reads the Russian business press, in which it is not the first year that it has been considered good form to remind and out of place that access to cheap and long-term credit resources is practically denied to Russian banks. It is clear to the west. For the country as a whole, cash oxygen is also blocked by all available and almost inaccessible means.
But in a good way, the IMF should be almost the first in line to place its funds in Russia. Few of the other countries once lent to the fund on the most favorable conditions for him, the IMF, but also meticulously then calculated for each dollar borrowed. Even the notorious default of 1998 of the year in this practice has not changed anything. Their own then "thrown", as they say, in full, and before the West, first of all, just before the IMF, the efforts of the minister, and then Prime Minister Mikhail Kasyanov, reported on the envy of the whole world.
It’s hardly worth talking about what it cost our economy and our people; in such cases, we usually have a short memory.
Probably, it is not by chance that, recently, more precisely, since the beginning of the sanctions war, the Russian Minister of Finance has been holding the post of first deputy prime minister. The one who steers the financial sphere, which the sanctions are really hooked the most, should be given a free hand. And there should be no ban on official statements. It should be understood that Anton Siluanov quite officially declared in response to the recommendations of the IMF that the government would still send the fund’s money to projects, but “rationally and preserving a sufficient amount of reserves.”
The first deputy prime minister quite regularly reported on the possible ways of spending the NWF funds even before the publication of the “recommendations” of the IMF. The turn in 7 percent of GDP did not accidentally seem quite achievable. Anton Siluanov noted that "some of them may go to infrastructure projects in Russia, because they have a long duration, and even tens and hundreds of billions of rubles a year will not so much affect exchange rate ratios."
The idea of large-scale financial support from the NWF of Russian exports was voiced by the head of the Ministry of Finance. As an example, the first deputy prime minister cited the construction of nuclear power plants for Russian projects.
- First Deputy Prime Minister explained to journalists.
It is characteristic that the IMF’s speech happened right now only because the fund has no indirect relation to how Russia's excess oil and gas revenues are allocated. Indeed, as long as the size of the National Wealth Fund does not reach 7 percent of GDP, by law, most of its funds go to the acquisition of foreign currency and foreign currency assets. And even taking into account the fact that the priority of the dollar for Russian financiers is already in the past, in that case you cannot do without dollar assets. If only because for reliability, diversification of assets is needed.
However, every extra ruble earned by Russia, oil or gas, invested in euros and dollars, actually turns into a liability. After all, having passed for some reason a double counting or conversion - from the petrodollar to the ruble and back, it is then also stored, and also used somewhere on the side. All this, of course, is nothing more than a series of virtual or, at best, paper operations, but we, Russians, have the lowest income from them. Less only in the mattress.
Much was said by Mr. Roaf with quite transparent hints that Russia should not continue to rely on large-scale financial support from the fund. It is unlikely that a year and a half ago, when there was a real threat of a long-term reversal of oil prices and the need to print out the NWF for completely different purposes, one of our officials would explain to the IMF representative that Russia has quite a decent money for this fund. replacement entirely from another fund.
It is not a secret for anyone that Russia was actually sentenced to the fact that the Reserve Fund, this nominal predecessor of the National Wealth Fund, had to spend all of it to cover the budget deficit. Moreover, they were sentenced, not without the participation of the IMF, which actually supported the sanctions against our banking sector. Now the IMF literally craves for the Russian Ministry of Finance not to even begin to spend money on infrastructure development, which, in fact, is still pretty neglected.
However, he has already begun. We have to repeat, but the fact is that the Budget Code of the Russian Federation stipulates that once the liquid part of the National Wealth Fund reaches the percentage of GDP in 7, its funds can be used. More than 4 billion dollars and about 165 billion rubles have already been invested in infrastructure projects, despite all the recommendations of the IMF. Another 138 billion rubles, and again to finance infrastructure projects, invested in VTB and Gazprombank. But the largest amounts, 584 billion rubles from the fund, are deposited with VEB RF. Another 279 billion rubles invested in preferred shares of state banks.
At the same time, the rest of the NWF funds are used quite actively, although at times it is risky. So, at least 3 billions of dollars the National Welfare Fund holds in the troubled Eurobonds of Ukraine, which now bring perhaps the highest profit. And this, most likely, pushes almost the main oligarch "Square", Igor Kolomoisky, to advise President Zelensky to default. After all, the main thing is that the Muscovites do not seem to have life like raspberries.
It remains to be recalled that only with 2018 of the year the NWF became the only sovereign fund of the Russian Federation, and on 1 of May 2019 of the year it counted 3,814 trillion. rub. According to the experience of using the Reserve Fund, in which the Russian financial authorities held only real money, the NWF is provided with the opportunity to operate with free funds, about 60 percent of them from the fund.
Did not count yet - did not cry
In Russia, it is customary to criticize the authorities for uncontrolled spending. This is when it comes to large-scale projects like the reconstruction of the BAM and Transsib, the construction of the Kerch Bridge or another high-speed highway Moscow - St. Petersburg. We continue to complain about the lack of investment activity of the business, both domestic and foreign, but as soon as it comes to large-scale government investments, many also do not like it.
Meanwhile, it seems to us that in our country there is more reason to invest in something real in any case than to freeze funds in foreign assets. No matter how high quality and reliable they may seem. Last Friday, this kind of recommendation was made to Russia from the International Monetary Fund (IMF). The Fund said so directly that “the Russian authorities should not spend the funds of the National Wealth Fund (NWF) on investment projects — it is better to continue investing them in high-quality foreign assets.”
The IMF expert opinion says it all very specifically:
“The authorities are recommended to refrain from quasi-budgetary operations with the National Wealth Fund, and should continue to invest in high-quality foreign assets (even after reaching the liquid part of the 7 fund of percent of GDP) in order to save resources for future generations and avoid procyclicality.”
The IMF councils, of course, are difficult to compare with US and European sanctions, but they are very similar to some kind of ultimatum. Is it any wonder that at a press conference in front of the Russian business press quite loyal to the IMF, the head of the mission of the Foundation for Russia, James Roaf, tried to soften the overall negative impression.
The head of the mission of the International Monetary Fund in the Russian Federation, James Roaf
For a start, he admitted that the IMF understands Russia's desire for financial independence, for which he, of course, a special thank you. But, in his own words, the Russian financial authorities "would hardly have had the sense of investing them (NWF funds) in the domestic economy." James Roaf said that “they see arguments in the IMF in favor of investing the fund’s money in long-term assets abroad.
To all appearances, the IMF regularly reads the Russian business press, in which it is not the first year that it has been considered good form to remind and out of place that access to cheap and long-term credit resources is practically denied to Russian banks. It is clear to the west. For the country as a whole, cash oxygen is also blocked by all available and almost inaccessible means.
But in a good way, the IMF should be almost the first in line to place its funds in Russia. Few of the other countries once lent to the fund on the most favorable conditions for him, the IMF, but also meticulously then calculated for each dollar borrowed. Even the notorious default of 1998 of the year in this practice has not changed anything. Their own then "thrown", as they say, in full, and before the West, first of all, just before the IMF, the efforts of the minister, and then Prime Minister Mikhail Kasyanov, reported on the envy of the whole world.
It’s hardly worth talking about what it cost our economy and our people; in such cases, we usually have a short memory.
American asset is Russian liability
Probably, it is not by chance that, recently, more precisely, since the beginning of the sanctions war, the Russian Minister of Finance has been holding the post of first deputy prime minister. The one who steers the financial sphere, which the sanctions are really hooked the most, should be given a free hand. And there should be no ban on official statements. It should be understood that Anton Siluanov quite officially declared in response to the recommendations of the IMF that the government would still send the fund’s money to projects, but “rationally and preserving a sufficient amount of reserves.”
First Deputy Prime Minister, Finance Minister Anton Siluanov
The first deputy prime minister quite regularly reported on the possible ways of spending the NWF funds even before the publication of the “recommendations” of the IMF. The turn in 7 percent of GDP did not accidentally seem quite achievable. Anton Siluanov noted that "some of them may go to infrastructure projects in Russia, because they have a long duration, and even tens and hundreds of billions of rubles a year will not so much affect exchange rate ratios."
The idea of large-scale financial support from the NWF of Russian exports was voiced by the head of the Ministry of Finance. As an example, the first deputy prime minister cited the construction of nuclear power plants for Russian projects.
“The site in Egypt for our production, where does the money come from? Here it was possible to take the refundable money from the National Welfare Fund. Such projects would be painless for our domestic economy, but would create additional demand for our products outside, ”
- First Deputy Prime Minister explained to journalists.
It is characteristic that the IMF’s speech happened right now only because the fund has no indirect relation to how Russia's excess oil and gas revenues are allocated. Indeed, as long as the size of the National Wealth Fund does not reach 7 percent of GDP, by law, most of its funds go to the acquisition of foreign currency and foreign currency assets. And even taking into account the fact that the priority of the dollar for Russian financiers is already in the past, in that case you cannot do without dollar assets. If only because for reliability, diversification of assets is needed.
However, every extra ruble earned by Russia, oil or gas, invested in euros and dollars, actually turns into a liability. After all, having passed for some reason a double counting or conversion - from the petrodollar to the ruble and back, it is then also stored, and also used somewhere on the side. All this, of course, is nothing more than a series of virtual or, at best, paper operations, but we, Russians, have the lowest income from them. Less only in the mattress.
No one except us is responsible for the ruble
Much was said by Mr. Roaf with quite transparent hints that Russia should not continue to rely on large-scale financial support from the fund. It is unlikely that a year and a half ago, when there was a real threat of a long-term reversal of oil prices and the need to print out the NWF for completely different purposes, one of our officials would explain to the IMF representative that Russia has quite a decent money for this fund. replacement entirely from another fund.
It is not a secret for anyone that Russia was actually sentenced to the fact that the Reserve Fund, this nominal predecessor of the National Wealth Fund, had to spend all of it to cover the budget deficit. Moreover, they were sentenced, not without the participation of the IMF, which actually supported the sanctions against our banking sector. Now the IMF literally craves for the Russian Ministry of Finance not to even begin to spend money on infrastructure development, which, in fact, is still pretty neglected.
However, he has already begun. We have to repeat, but the fact is that the Budget Code of the Russian Federation stipulates that once the liquid part of the National Wealth Fund reaches the percentage of GDP in 7, its funds can be used. More than 4 billion dollars and about 165 billion rubles have already been invested in infrastructure projects, despite all the recommendations of the IMF. Another 138 billion rubles, and again to finance infrastructure projects, invested in VTB and Gazprombank. But the largest amounts, 584 billion rubles from the fund, are deposited with VEB RF. Another 279 billion rubles invested in preferred shares of state banks.
At the same time, the rest of the NWF funds are used quite actively, although at times it is risky. So, at least 3 billions of dollars the National Welfare Fund holds in the troubled Eurobonds of Ukraine, which now bring perhaps the highest profit. And this, most likely, pushes almost the main oligarch "Square", Igor Kolomoisky, to advise President Zelensky to default. After all, the main thing is that the Muscovites do not seem to have life like raspberries.
Igor Kolomoisky
It remains to be recalled that only with 2018 of the year the NWF became the only sovereign fund of the Russian Federation, and on 1 of May 2019 of the year it counted 3,814 trillion. rub. According to the experience of using the Reserve Fund, in which the Russian financial authorities held only real money, the NWF is provided with the opportunity to operate with free funds, about 60 percent of them from the fund.
Information