Russia to replenish rainy-day fund in yuan – Finance Ministry

Russia’s Finance Ministry intends to replenish the National Wealth Fund (NWF) in Chinese yuan starting from next year as part of its budget rule, the head of the ministry, Anton Siluanov, has revealed.

The fund, which accumulates revenue from oil exports, was created to support the national pension system, and the funds can also be used to cover budget deficits in times of crisis. The assets of the fund amounted to $186.5 billion as of December 1.

In 2020, the ministry proposed diversifying the assets of the National Wealth Fund, allowing part of them to be held in precious metals, particularly gold.

“From January next year, the [new] budget rule will work…We will make an assessment of monthly indicators. Accordingly, we will make a decision on replenishing or not replenishing the NWF and in what currency: in rubles, in yuan, and so on,” Siluanov told reporters on Tuesday.

“In order to hedge exchange rate risks, we always did it in foreign currency. Among the currencies of friendly countries, the yuan has the characteristics of a reserve currency and sufficient liquidity on our domestic foreign exchange market to the greatest extent. Therefore, the NWF will be replenished in this currency,” the minister explained.

In November, Russian President Vladimir Putin signed into law a new fiscal rule that envisages higher budget spending in 2023-2024. The law does not establish a reference oil price – called the ‘base price’ – as was done previously to determine the amount of oil and gas revenues allocated to the budget, with additional revenues sent to the NWF. Instead, for 2023-2025, it indicates the specific figure of 8 trillion rubles ($114 billion) worth of oil and gas revenues that are slated to fund budget expenses, with any excess inflows going to the NWF.

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