Russia NWF: Depletion Risk 2026 – Economists’ Warning
Russia’s National wealth Fund Faces Depletion by 2026 amid Economic Pressures
Russia’s National Wealth Fund (NWF), a crucial financial reserve, might potentially be depleted by 2026 if current economic trends continue, according to economists at the Russian presidential Academy of National Economy and Public Administration and the Gaidar Institute. This projection highlights increasing fiscal challenges for the Kremlin as declining oil prices and a strengthening ruble reduce government revenue.
As of June 1, the NWF held 2.8 trillion rubles (about $36.4 billion) in liquid assets, the lowest since 2019. This marks a significant drop from its prewar peak of $113.5 billion in early 2022. The fund has shrunk by more than half in ruble terms and by two-thirds in dollar terms as then. Growing budget deficits and significant investments in infrastructure and state bailouts have accelerated this depletion of Russia’s economy.
In May, the finance Ministry withdrew 35.9 billion rubles ($466.7 million) to cover the federal deficit.An additional 532 billion rubles ($6.9 billion) was allocated to large-scale, state-backed projects.State banks received 300 billion rubles ($3.9 billion) for a high-speed rail line between Moscow and St. Petersburg. The State Transport Leasing Company received 6.5 billion rubles ($84.5 million) for aircraft purchases, and VEB, a state growth bank, received 1 billion rubles ($13 million) for metro trains in St. Petersburg. Furthermore, 50 billion rubles ($650 million) was allocated to undisclosed projects.
Consequently, the NWF now holds only 153.7 billion yuan (approximately $21 billion) in foreign currency assets, the lowest since its creation in 2008. Its gold reserves have also decreased sharply, from over 400 metric tons before Russia’s invasion of Ukraine in 2022 to 139.5 metric tons.
Ilya Sokolov, head of the Budget Policy Research Laboratory at RANEPA, said that if oil prices remain around $52 per barrel—below the budget’s $69.70 benchmark—and the ruble stays strong, the fund could be depleted in just over a year.
The Kremlin initially planned to resume contributions to the NWF this year after three years of wartime spending.However, falling energy prices have disrupted these plans. The Finance Ministry now anticipates oil and gas revenues of 8.3 trillion rubles ($107.9 billion) in 2025, down from the projected 10.9 trillion ($141.7 billion).The expected budget deficit has also increased to 3.8 trillion rubles ($49.4 billion), leading to plans to withdraw an additional 447 billion rubles ($5.8 billion) from the fund,impacting Russia’s economy.
What’s next
Officials are considering budget cuts and a revision to the fiscal rule,which governs the NWF’s usage. The current rule allows withdrawals when oil prices fall below $60 per barrel. Lowering this threshold to $50 could limit future spending but might necessitate cuts of up to 1.6 trillion rubles ($20.8 billion), according to Alfa Bank chief economist Natalia Orlova.