During the go-go days of high oil prices, Russia very prudently build up large foreign currency reserves, over a half trillion U.S. dollars. During the last several years as Western sanctions bite and the price of crude oil has plummeted, the rainy day funds are draining fast.
Russia’s Reserve Fund dropped 73.3% to 972.1 bln rubles ($16.2 bln) in 2016 and the National Wealth Fund (NWF) fell 16.6% to 4.4 trillion rubles ($73.3 bln) in 2016, the Russian Finance Ministry said on Tuesday, reports Russian State News Agency TASS.
The Reserve Fund plummeted 58.2% in December 2016 to 972.1 bln rubles ($16.2 bln). The National Wealth Fund (NWF) declined 5.8% to 4.4 trillion rubles ($73.3 bln) in the same period.
A portion of Reserve Fund’s resources in foreign exchange held at accounts with the Bank of Russia and amounting to $6.9 bln, 6.4 bln euro and 1.2 bln pounds sterling were sold for 966.9 bln rubles ($16.1 bln) in December 2016 and earned funds were credited to the federal budget, the Ministry reported.
It remains to be seen what the Kremlin will do if economic pressure continues on the federal budget. Attempts to talk up the price of crude oil above a $50 handle, has been futile as of yet.