A new government proposal has set the spending from Russia’s National Wealth Fund to support infrastructure projects and exports between 2020 and 2022 at $15.67 billion, Reuters reported on Monday.
The move comes as the country tries to boost its lagging economy burdened by western sanctions. The government believes state spending could steer the oil-dependent economy through waning investment activity after the U.S. and other countries imposed financial sanctions in 2014, causing sharp swings in the rouble and suffocating investment activity, the news agency writes.
In a draft law published late on Friday, the Finance Ministry said it planned to use money from the National Wealth Fund to issue sovereign loans to countries that can use them to pay for Russian exports.
“(This) will … minimize the significantly increased risks of seizure and blocking of Russian assets in foreign jurisdictions, primarily the U.S. and Western European countries, and, as a consequence, the complete loss of Russian investments due to unfriendly actions of foreign states against Russia,” the ministry said.
The move should support the Russian economy, particularly its energy sector, the ministry said, while adding that it planned to use the National Wealth Fund, which accumulates revenues from oil exports and was initially designed to support the country’s pension system, to cover up to 20% of loans required by infrastructure projects within Russia, although the rate of return should not be lower than for OFZ treasury bonds.
The National Wealth Fund was worth $124 billion as of Nov. 1, up from $58 billion in early 2019.
Gross domestic product growth, in contrast, is slowing despite numerous calls from President Vladimir Putin for Russia to outpace global GDP growth. The Russian GDP growth is seen at around 1% in 2019 versus the 2.3% recorded in 2018.
The government will be able to use money from the National Wealth Fund once its liquid assets exceed 7% of GDP, something the finance ministry expects to happen in 2020.
