"Russia able to withstand one more economic crisis"
Russia’s National Wealth Fund (NWF) will be able to withstand one more economic crisis amounting to the crisis of 2014, head of the Accounts Chamber and initiator of the Reserve Fund Alexey Kudrin said.
"In 2008 and 2009, half of the Reserve Fund was spent on saving and keeping the budget system.," he recalled, speaking in the State Duma. "In recent years, in particular during a two-year recession, the second half of the Reserve Fund was spent," TASS cited the head of the Accounts Chamber as saying.
"Today there is no reserve fund, the NWF remained, and it will be enough for another one similar crisis," Kudrin noted.
According to the Finance Ministry, as of August 1, the volume of the NWF totaled 4.844 trillion rubles. In dollar terms the volume of fund grew to $77.16 bln from $77.11 bln as of July 1.
Chairman of the State Duma's Financial Market Committee, Anatoly Aksakov, speaking with Vestnik Kavkaza, noted that Russia's current reserves represent a reliable airbag for the state and citizens. "If we recall the 1998 default, our reserves amounted to $9 billion, and now they, in conjunction with the Central Bank's reserves, exceed $470 billion. This allows us to resolve any issues related to the implementation of budget commitments, with a significant margin - the level reserves have never dropped below $200 billion in recent years. Therefore, when Kudrin says that this money will be enough for only one crisis, he just plays it safe," he said.
In this regard, Anatoly Aksakov proposed to raise the threshold of the budget rule. "I think that the oil price, on which the budget is based, is too low, the cut-off line can be higher, for example $45 per barrel at current prices of $70 per barrel. It would allow us not just have an airbag, but also a balanced and diversified economy. We should have a diversification program that would rely on an increased budgetary rule with an aim to develop the economy. We have an Industrial Development Fund, which proved reliable, although it yields less than the market - perhaps through this fund such a program could be run," the chairman of the State Duma's Financial Market Committee Anatoly Aksakov suggested.
Professor of the RANEPA faculty of Finance, Money Circulation and Credit, Yuri Yudenkov, supported the focus on the development of the economy instead of focus on the replenishment of reserves. "According to expert estimates, we spent two crisis years using our reserves, we had 9 trillion rubles, half of which was left. This money will be enough for two years with the economy running. Kudrin is right that it is good that we have them, but that's all," he said.
"In any case, the government's oil revenues should be directed to the development of competitive directions, including raw materials: we are competitive in the extraction of coal, oil, gas and rare earth metals, but geological surveys have been abandoned to this day. Nothing new can be invented in such an economy, and it is important to purposefully direct the emerging additional resources to competitive industries. I see no point in replenishing our reserves. But it is necessary to direct incomes in those spheres, the development of which is beneficial for the future," Yury Yudenkov concluded.