Downward Angle Symbol A symbol in the form of an angle pointing downwards. Russian President Vladimir Putin. MIKHAIL METZEL/POOL/AFP via Getty Images
- Liquid assets in the Russian National Fund fell by 44% from January 2022 to December 2023.
- According to Bloomberg, the fund's total holdings fell 12% over the same period due to the war in Ukraine.
- According to Bloomberg Economics, the fund's liquid assets could only last another year or two if Russian oil export prices fall below $50 a barrel.
The stock of liquid assets in Russia's National Fund has fallen by over 44% since Moscow's invasion of Ukraine, according to a Bloomberg report on Russian Finance Ministry data on Wednesday.
The amount of assets that can be easily liquidated under Russia's National Welfare Fund rose from 8.9 trillion rubles, or $100.4 billion, in the two years from January 2022 – the month before the invasion – to December 2023, according to Bloomberg. Dollar dropped to 5 trillion rubles.
Meanwhile, the National Wealth Fund's total holdings fell 12% over the same period.
The massive collapse in the National Wealth Fund's liquid assets came as its holdings in Russian companies and infrastructure bonds increased by 2 trillion rubles, according to Bloomberg calculations. This suggests that the government is using its liquidity reserves to support the economy.
Russia's Finance Ministry also used around 3 trillion rubles from the fund to cover its budget deficit in 2023, after doubling its defense spending over the same period.
Russia may soon run out of time and money as it continues to finance the war in Ukraine, which is about to enter its third year.
While Russia's economy still appears resilient, it is struggling with a series of Western sanctions and weak international oil prices, which have fallen about 10% in the past 12 months. Russia's flagship Ural crude was exported last year at an average price of $62.99 a barrel – 17% less than the previous year, the Finance Ministry said.
Alex Isakov, an economist at Bloomberg Economics, said Russian National Fund's liquid assets would last another year or two if the country's oil export prices fall below $50 a barrel.
“If oil prices continue to ignore the risks of supply disruption from the Israel-Hamas war, the NWF’s remaining stock of liquid assets will continue to dwindle, making Russia increasingly vulnerable to shocks,” Isakov said.