World Economy

Russia's Wealth Fund Shrinks

Russia's Wealth Fund ShrinksRussia's Wealth Fund Shrinks

Russia’s Reserve Fund, one of the country’s two sovereign wealth funds, dropped last month the most in more than four years as the government unsealed it to cover a widening budget deficit.

The value of the fund fell $8 billion in February to $77.1 billion, the lowest since December 2012, as the finance ministry used its maximum yearly allowance of 500 billion rubles ($8 billion) for budget financing, according to a statement by the ministry on Tuesday, Bloomberg reported.

The world’s biggest energy exporter uses the fund to cover its burgeoning shortfall after the price of oil, which together with natural gas accounts for about half of state revenue, fell to the lowest since 2009. The finance ministry last week said it wants to dip deeper into the fund as the deficit may be 3.8 percent of gross domestic product this year.

“The reserves provide not only budget stability, but also financial certainty,” Finance Minister Anton Siluanov said Monday. “If we eat through our reserves, we’ll lose that stability and won’t have the resources to finance the budget deficit.”

Russia, facing higher borrowing costs in global markets amid US and European Union sanctions, doesn’t expect to borrow abroad in 2016 after already ruling out issuing foreign bonds in 2015, according to Siluanov.