Russia’s Disappearing SWF – Part 2

Ashby Monk

I mentioned in a previous post that Russia’s poor economic conditions may result in the country’s SWFs being completely tapped out by 2012/13. It looks like I may have been wrong; the Reserve Fund will likely not survive that long.

According to Russian Finance Minister Alexei Kudrin on Wednesday, the Reserve Fund will be “practically exhausted” in 2010, and the government will have to cut spending in order to minimize their budget deficit, which is estimated at 7.4 percent this year.  

Russia has two SWFs–the Reserve Fund and the National Welfare Fund–so it has plenty of assets on hand to finance the budget deficits. At last count, the combined assets under management was over $200 billion dollars. However, given that the Reserve Fund is the larger of the two SWFs, the idea that it could be fully exhausted by next year is remarkable.

It looks like Russia will be heading back into international debt markets…

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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