On Using Oil and Gas Revenues of the Federal Budget

In March 2009, Russia’s Finance Ministry got down to implementing Russian Government Order dated March 10, 2009 N 271-r “On Using Funds of the Reserve Fund to Balance the Federal Budget”. Some funds of the Reserve Fund in foreign currency held in accounts with the Bank of Russia were converted into rubles to be later placed into the account to record funds of the federal budget. As a result of the said transactions, 7.95 billion US dollars, 5.97 billion euros, 1.23 billion pounds sterlings were sold and 600.00 billion rubles were purchased. Conversion transactions in funds of the Reserve Fund were conducted in conformity with the currency structure approved earlier at official exchange rates of foreign currencies set by the Bank of Russia as of the date of transactions and didn’t have any impact on the conditions of the foreign exchange market.

In order to minimize risks and boost liquidity of the Reserve Fund’s and The National Wealth Fund’s (hereinafter – the Funds) funds, Russian Finance Ministry Orders dated February24, 2009, N 115-116 changed the proportion of authorized financial assets in the total amount of the Funds’ invested funds. In accordance with the said orders debt instruments of foreign government agencies, central banks and international financial institutions were excluded from indexes used to calculate interest on the Funds’ accounts with the Bank of Russia. Placement of the Reserve Fund’s funds into debt instruments of international financial institutions are to be made through purchasing the said authorized debt instruments rather than through including these assets into the said indexes.

As of April 1, 2009, the aggregate amount of the Reserve Fund was 4117.67 billion rubles, which is equivalent to 121.06 billion US dollars. As of April 1, 2009, amounts of balances in separate accounts to record funds of the Reserve Fund were:

-           0.06 billion rubles;

-          55.96 billion US dollars

-          39.63 billion euros;

-          8.41 pounds sterlings.

In March 2009, Russia’s reserve position in the IMF formed through the Reserve Fund’ financial resources increased by 110.00 million SDRs and as of April 1, 2009, amounted to 556.88 million SDRs.

 The aggregate calculated income from placing funds of the Reserve Fund recalculated in dollars  for a period from January 15, 2009, to March 31, 2009, was 0.65 billion US dollars, which is equivalent to 22.25 billion rubles. Calculated interest income from placing funds of the Reserve Fund in foreign currency was (in currency of account and ruble equivalent): 0.5 billion US dollars (1.71 billion rubles); 0.38 billion euros (16.89 billion rubles); 0.08 billion pounds sterlings (3.65 billion rubles). The exchange rate difference from recalculating balances of funds in accounts to record funds of the Reserve Fund in foreign currency for a period from January 15, 2009 to March 31, 2009 was appositive value of 292.53 billion rubles.

In accordance with resolution N 766, as of April 1, 2009, 432.10 billion rubles were transferred from the account to record funds of the National Wealth Fund to be deposited with Vnesheconombank and out of this amount:

-          257.10 billion rubles to be deposited for a period up to December 31, 2019, with an interest rate of 7% per annum;

-          17500 billion rubles to be deposited for a period up to October 21, 2013, with an interest rate of 7% per annum.

As of April 1, 2009, the aggregate amount of the National Wealth Fund was 2915.21 billion rubles, which is equivalent to 85.71 billion US dollars. As of April 1, 2009, amounts of balances were:

1)     In separate accounts to record funds of the National Wealth Fund with the Bank of Russia:

                 -4.39 billion rubles;

                  -34.33 billion US dollars;

                  -24.42 billion euros;

                  -4.44 billion pounds sterlings;

2)     on deposits with Vnesheconombank:

                    -432.10 billion rubles.

The aggregate calculated income from placing funds of the National Wealth Fund recalculated in dollars for a period for a period from January 15, 2009, up to March 31, 2009, was 0.36 billion US dollars, which is equivalent to  12.22 billion rubles. Calculated interest from placing funds of the National Wealth Fund in foreign currency was (in currency of account and ruble equivalent): 0.03 billion US dollars (1.13, billion rubles); 0.21 billion euros (9.35 billion rubles); 0.04 billion pounds sterlings (1.74 billion rubles). The exchange rate differences from recalculating balances of funds in accounts to record funds of the National Wealth Fund in foreign currency for a period from January 15, 2009 up to March 31, 2009, was a positive value of 161.44 billion rubles.

Indicators of aggregate amounts of the Reserve Fund and the National Wealth Fund as well as of calculated incomes from placing funds of the Reserve Fund and the National Wealth Fund were calculated on the basis of official exchange rates of foreign currencies set by the Bank of Russia as of the date prior to the reporting date and of cross rates calculated on the basis of the said exchange rates.

Under the Budget Code of the Russian Federation, oil and gas revenues of the federal budget for February 2009, in the amount of 164.68 billion rubles were transferred to the account to record funds of the federal budget. Under the Russian government Resolution dated December 17, 2007, N 892 “On Making Settlements and Transferring Funds to Form and USE Oil and Gas revenues of the Federal Budget, Oil and gas Transfer, Funds of the Reserve Fund and the National Wealth Fund”, the abovementioned oil and gas revenues were transferred to the account to record funds received from oil and gas revenues of the federal budget and were later used to finance oil and gas transfer in full.

Detailed statistics on transactions in funds of the Reserve Fund and the National Wealth Fund is posted on the Internet site of the Russian Finance Ministry in the following sections: “The Reserve Fund” and “The National Wealth Fund” in appropriate subsections in Russian and English, the statistics is updated on a regular basis.

Origin: Press Service of Russia’s Finance Ministry