War ate up almost quarter of Russia's liquid assets in year – Bloomberg
Photo: The war with Ukraine ate up 25% of the Kremlin's liquid assets
In 2024, Russia spent nearly a quarter of the reserves from its National Wellbeing Fund to sustain the economy during wartime and finance its invasion of Ukraine, Bloomberg reports.
According to Russia's Ministry of Finance, the National Wellbeing Fund remained practically unchanged in 2024, amounting to approximately 12 trillion rubles ($117 billion). However, its holdings of cash and investments that can be easily liquidated decreased by 24%, reaching 3.8 trillion rubles as of January 1, compared to the beginning of the previous year.
The fund has decreased by 57% from the 8.9 trillion rubles available at the beginning of 2022, prior to President Vladimir Putin ordering the full-scale invasion of Ukraine in February of that year.
The Kremlin's coffers are under pressure due to rising budget expenditures associated with the military's needs. While revenues from oil and gas exports exceeded government forecasts last year, the Ministry of Finance spent 1.3 trillion rubles from the wealth fund to cover the budget deficit.
The reserves were also spent on measures to support the Russian economy under sweeping sanctions imposed by the US and its allies, as well as to fund large infrastructure projects.
According to Bloomberg's calculations, the value of the fund's shares in bonds issued to finance such projects grew by 50% last year and quadrupled since the beginning of 2022. The fund's stakes in Russian companies increased in price by 44% over the past three years.
In an October report on possible scenarios for monetary policy, the Bank of Russia identified risks of the National Wellbeing Fund being completely depleted by 2025 in the event of a "significant deterioration in external conditions" and a collapse in oil prices.
As RBC-Ukraine previously reported, the liquid portion of Russia's National Wellbeing Fund, which was accumulated from oil and gas revenues between 2010 and 2022, is expected to be depleted by the end of 2025.
