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Russia Reserve Fund halves during 2009 recession

Published 01/11/2010, 11:56 AM
Updated 01/11/2010, 12:00 PM

MOSCOW, Jan 11 (Reuters) - Russia's Reserve Fund declined by 2.2 trillion roubles ($74.98 billion) in 2009, as the government ploughed cash into the budget to help the country out of its first recession in a decade and compensate falling tax revenues.

The Reserve Fund, amassed during years of oil-fuelled economic boom and destined to cushion the economy in harder times, stood at 1.83 trillion roubles as of Jan. 1, 2010, down from 4.03 trillion roubles a year earlier, data from the Finance Ministry showed on Monday.

During the course of the year, 2.96 trillion roubles was transferred from the Reserve Fund to the budget -- far outweighing any incoming cash from oil taxes, the data showed.

Russia had factored in a deficit of around 3.22 rillion roubles, or 8.3 percent of gross domestic product (GDP) this year. [ID:nLN305115]

But a recovery in the price of key export oil in the second half of the year, as well as some brightening of the broader economic outlook, have led analysts to forecast a smaller shortfall of 6.6 percent [ECILT/RU].

Russia's second oil wealth fund, known as the National Welfare Fund, started 2010 at 2.77 trillion roubles compared to 2.58 trillion roubles a year earlier, the data showed.

The NWF is intended for longer-term projects, but some of its cash was used to support the stock market at the height of the crisis and it may also be tapped to bolster the pension pot.

In December, $2 billion and 434 billion roubles of NWF money was put on desposit at state bank VEB "to increase profitability and diversify investments", the Finance Ministry said.

Under the going exchange rate on Jan. 1, the Reserve Fund was worth $60.52 billion and the NWF $91.56 billion. (Writing by Toni Vorobyova; Editing by Ron Askew)

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