MOSCOW, October 6 (RIA Novosti) – Russia’s Economic Development Minister said Sunday that up to 1.2 trillion rubles ($37 billion) could be taken from a rainy-day windfall oil revenue fund and invested in infrastructure projects as the Russian economy faces a growing risk of stagnation.
The amount is 40 percent of the contents of Russia’s National Welfare Fund, a key fiscal buffer built up by the Kremlin during years of high energy prices.
“At the moment we are talking about roughly 40 percent, but this is only an idea for the time being, it’s not fixed in the required documents,” Economic Development Minister Alexei Ulyukayev told reporters in Indonesia.
President Vladimir Putin announced in a keynote June speech on economic policy that up to 450 billion rubles would be invested from the National Welfare Fund on an expansion of the Trans-Siberian Railroad, a new multilane highway encircling Moscow, and a new high speed railroad between the Russian capital and Kazan. Last week, Putin did not rule out that more money for other infrastructure ventures would also be required.
“In line with reasonable criteria, we would like to add other projects,” Ulyukayev said Sunday.
The National Welfare Fund, which currently contains the equivalent of about 4.3 percent of Russia’s GDP, is forecast to contract to about 3.2 percent of Russian GDP by 2016, the World Bank said in a recent Economic Report. Another similar fund, the Reserve Fund, currently holds the equivalent of about 4 percent of the country’s GDP, according to World Bank figures.
Former Finance Minister Alexei Kudrin, who was responsible for the creation and building up of Russia’s two rainy day funds during the 2000s, has warned that using the National Welfare Fund in this way could lead to a serious increase in the deficit of Russia’s Pension Fund.
Officials expect economic growth in Russia to fall to 1.8 percent this year, its lowest level since the 2009 economic crisis. The slowdown has forced the government to implement budget cuts, and has stoked fears that Russia is entering a longer period of economic stagnation.