Russia considering how to dispose of National Wealth Fund

Russia considering how to dispose of National Wealth Fund

Russia’s Ministry of Finance expects the country’s National Wealth Fund to exceed 7% of GDP in 2020 enabling the government to use this money. At the moment, the fund’s structure doesn’t include gold reserves, but Minister of Finance Anton Siluanov considers long-term investment in the precious metal to be more sustainable compared to financial assets.

Russia could consider investing part of its National Wealth Fund in gold, says Reuters citing the country’s Minister of Finance Anton Siluanov. “There is a discussion on whether to invest the fund’s money in gold and precious metals. There are a lot of supporters and opponents,” said the minister. The Ministry of Finance is now considering the fund’s new investment structure supposing that it will mirror the foreign exchange reserves structure of the Central Bank.

“The Ministry of Finance does not propose [the fund] investing in the precious metals, though one could think and consider this,” Siluanov said. The minister assumed that gold might well be present when investing reserve money adding that he saw investment in the precious metal as more sustainable in the long-term than in financial assets.

Russia’s National Wealth Fund, which serves to accumulate revenues from oil exports, was worth $124 billion as of 1 December. Initially, the fund was designed to support the country’s pension system. As soon as the fund’s liquid assets exceed 7% of GDP, the government will be able to use this money. The Ministry of Finance expects it to happen in 2020.

According to Minister of Finance Anton Siluanov, gold might well be present when investing reserve money. Photo:

At the end of November, the ministry proposed spending one trillion rubles ($16 billion) from the fund to support infrastructure projects and exports in 2020-2022 to boost the country’s economic growth. According to a draft law published by the ministry, money from the National Wealth Fund could be allocated to cover up to 20% of loans required by infrastructure projects within Russia. Besides, the Ministry of Finance intends to use this money to issue sovereign loans to countries that can use them to pay for Russian exports.

Russia’s Polyus and Polymetal along with Canada’s Kinross are the world’s top gold producers. The country’s gold miners usually sell their product to Russian commercial banks, which then resell it to the Central Bank. The regulator has been the main buyer of gold in recent years, as it has been aiming to reduce the share of US dollar assets in its reserves. As of 1 December, the Central Bank’s gold reserves stood at 72,7 million troy ounces worth $105,9 billion.

By Anna Litvina