In fact, the National Welfare Fund is replenished from federal budget funds, which are subject to separate accounting and management in order to ensure co-financing of voluntary pension savings of Russian citizens, as well as ensuring a balance between the federal budget and the budget of the Russian Pension Fund.
The part of the National Welfare Fund denominated in foreign currency and placed by the Russian government in accounts with the Bank of Russia, which is invested by it in foreign financial assets, is accounted for as part of the International reserves of the Russian Federation. Part of the funds of the National Welfare Fund was used in projects that are unacceptable in terms of risk and liquidity for the placement of international reserves. Thus, the National Welfare Fund performs the functions of a riskier, but potentially more profitable instrument for the Government of the Russian Federation.
Description
The National Welfare Fund of Russia was formed on February 1, 2008 as a result of the division of the Stabilization Fund in force at that time into the Reserve Fund (created to provide financial support for oil and gas transfers) and the National Welfare Fund (created to ensure co-financing of voluntary pension savings of citizens of the Russian Federation and balance (covering the deficit ) budget of the Pension Fund of the Russian Federation). The National Welfare Fund was replenished from oil and gas revenues of the federal budget in a volume exceeding the volume of oil and gas transfers approved for the corresponding financial year, from the moment when the accumulated volume of the Reserve Fund reached (exceeded) its standard value.
The National Welfare Fund is a “safety cushion” that allows the state to compensate for the loss of oil and gas revenues in the event of a sharp drop in oil prices and to fulfill all social obligations assumed.
On January 1, 2018, the National Welfare Fund was merged with the Reserve Fund into a single fund based on the National Welfare Fund. On February 1, 2018, the Reserve Fund ceased to exist, and the funds in it were previously used to ensure that the state fulfills its spending obligations.
As a result of the merger of the funds, the intended purpose of the NWF funds remained the same: co-financing voluntary pension savings of Russian citizens, ensuring the balance of the Pension Fund budget, but the goal of ensuring balance (covering the deficit) of the federal budget was also added.
Formation of the National Welfare Fund
The National Welfare Fund is formed through:
Additional oil and gas revenues from the federal budget above the cut-off price are used to replenish the National Welfare Fund. In turn, the cut-off price is the base price of 40 US dollars per barrel of Urals oil in 2017 prices, subject to annual indexation from 2018 by 2 percent. The determination of the base oil price at this level is determined by the assessment of the long-term equilibrium level of oil prices.
Management of funds of the National Welfare Fund
The funds of the National Welfare Fund are managed by the Ministry of Finance of Russia in the manner established by the Government of the Russian Federation. Certain powers to manage the funds of the National Welfare Fund may be exercised by the Central Bank of Russia.
Managing the funds of the National Welfare Fund in order to ensure a stable level of income from their placement in the long term allows for the possibility of obtaining negative financial results in the short term.
Accommodation
The funds of the National Welfare Fund, both individually and simultaneously, can be placed in foreign currency and financial assets of the following types:
- debt obligations of foreign governments, foreign government agencies and central banks;
- debt obligations of international financial organizations, including in the form of securities;
- deposits and balances in bank accounts with banks and credit institutions, including for the purpose of financing self-sustaining infrastructure projects;
- deposits and balances in bank accounts in the state corporation "Bank for Development and Foreign Economic Affairs (Vnesheconombank)", including for the purpose of financing projects of the state corporation "Bank for Development and Foreign Economic Affairs (Vnesheconombank)" in the real sector of the economy, implemented by Russian organizations;
- deposits and balances in bank accounts with the Central Bank of the Russian Federation;
- debt obligations and shares of legal entities, including Russian securities related to the implementation of self-sustaining infrastructure projects (the list of such projects is approved by the Government of the Russian Federation);
- units of investment funds, the trust management of which is carried out by the Management Company of the Russian Direct Investment Fund.
The Government of the Russian Federation, as part of reporting on the execution of the federal budget, submits to the State Duma of the Federal Assembly of the Russian Federation and the Federation Council of the Federal Assembly of the Russian Federation an annual report on the formation and use of additional oil and gas revenues of the federal budget, quarterly and annual reports on the formation and use of funds from the National Welfare Fund and about the management of its funds.
Structure of asset allocation and profitability
The Government of the Russian Federation establishes the maximum norms of permitted financial assets in the total volume of allocated funds of the National Welfare Fund. In order to increase the efficiency of managing the funds of the National Welfare Fund, the Ministry of Finance of Russia is authorized to approve the regulatory shares of permitted financial assets in the total volume of allocated funds of the National Welfare Fund within the limits of the corresponding shares established by the Government of the Russian Federation.
| Permitted financial assets as defined by the Budget Code of the Russian Federation | Limit shares established by the Government of the Russian Federation |
|---|---|
| Maximum share of foreign debt obligations | 100 % |
| Maximum share of debt obligations of foreign government agencies and central banks | 30 % |
| Maximum share of debt obligations of international financial organizations | 15 % |
| Maximum share of deposits and balances in bank accounts with the Central Bank of the Russian Federation | 100 % |
| Maximum share of debt obligations of legal entities | 50 % |
| Maximum share of shares of legal entities | 50 % |
| The maximum share of debt obligations and shares of Russian legal entities related to the implementation of projects (with the exception of projects implemented with the participation of the joint-stock company "Management Company of the Russian Direct Investment Fund" and the State Atomic Energy Corporation "Rosatom") | no more than 40% of the volume of the National Welfare Fund as of as of April 1, 2015, but not more than RUB 1,738 billion. |
| The maximum share of debt obligations and shares of Russian legal entities related to the implementation of projects implemented with the participation of the joint-stock company "Management Company of the Russian Direct Investment Fund" | no more than 290 billion rubles. |
| The maximum share of debt obligations and shares of Russian legal entities related to the implementation of projects implemented with the participation of the State Atomic Energy Corporation Rosatom | no more than 290 billion rubles. |
As of January 1, 2018, the volume of the National Welfare Fund amounted to 3,753 billion rubles, which is equivalent to $65 billion, including:
- About US$15 billion, EUR 15 billion, and GBP 3 billion are placed in separate accounts for the accounting of funds of the National Welfare Fund with the Bank of Russia;
- on deposits with Vnesheconombank - more than 222 billion rubles and 6 billion US dollars;
- in debt obligations of foreign states on the basis of a separate decision of the Government of the Russian Federation, without presenting a requirement for a long-term creditworthiness rating - USD 3.00 billion;
- in securities of Russian issuers related to the implementation of self-sustaining infrastructure projects, the list of which is approved by the Government of the Russian Federation - 113 billion rubles and 4 billion US dollars;
- in preferred shares of credit institutions - about 279 billion rubles;
- on deposits with VTB Bank (PJSC) and GPB Bank (JSC) in order to finance self-sustaining infrastructure projects, the list of which is approved by the Government of the Russian Federation - about 164 billion rubles.
The total income from placing the Fund's funds in permitted financial assets, excluding funds in accounts with the Bank of Russia, in 2017 amounted to 50.84 billion rubles, which is equivalent to $0.87 billion.
In 2018, the revenues of the federal budget of the Russian Federation from the placement of funds from the National Welfare Fund amounted to 70.52 billion rubles.
All data on the structure of the National Welfare Fund's investments in financial assets and the return on investment are updated on an annual basis on the official website of the Russian Ministry of Finance.
It is allowed to obtain a negative financial result from the placement of funds from the National Welfare Fund.
Dynamics of changes
Information on changes in the volume of the National Welfare Fund in US dollars and in ruble equivalent, as well as data on the movement of funds and the results of managing the funds of the National Welfare Fund are published monthly on the website of the Ministry of Finance of Russia.
| date | Fund size billion $ |
Fund size billion rubles |
|---|---|---|
| 01.02.2008 | 32,00 | 783,31 |
| 01.03.2008 | 32,22 | 777,03 |
| 01.04.2008 | 32,90 | 773,57 |
| 01.05.2008 | 32,72 | 773,82 |
| 01.06.2008 | 32,60 | 773,93 |
| 01.07.2008 | 32,85 | 770,56 |
| 01.08.2008 | 32,69 | 766,48 |
| 01.09.2008 | 31,92 | 784,51 |
| 01.10.2008 | 48,68 | 1 228,88 |
| 01.11.2008 | 62,82 | 1 667,48 |
| 01.12.2008 | 76,38 | 2 108,46 |
| 01.01.2009 | 87,97 | 2 584,49 |
| 01.02.2009 | 84,47 | 2 991,50 |
| 01.03.2009 | 83,86 | 2 995,51 |
| 01.04.2009 | 85,71 | 2 915,21 |
| 01.05.2009 | 86,30 | 2 869,44 |
| 01.06.2009 | 89,86 | 2 784,14 |
| 01.07.2009 | 89,93 | 2 813,94 |
| 01.08.2009 | 90,02 | 2 858,70 |
| 01.09.2009 | 90,69 | 2 863,08 |
| 01.10.2009 | 91,86 | 2 764,37 |
| 01.11.2009 | 93,38 | 2 712,56 |
| 01.12.2009 | 92,89 | 2 769,84 |
| 01.01.2010 | 91,56 | 2 769,02 |
| 01.02.2010 | 90,63 | 2 757,89 |
| 01.03.2010 | 89,63 | 2 684,21 |
| 01.04.2010 | 89,58 | 2 630,27 |
| 01.05.2010 | 88,83 | 2 601,62 |
| 01.06.2010 | 85,80 | 2 616,54 |
| 01.07.2010 | 85,47 | 2 666,41 |
| 01.08.2010 | 88,24 | 2 663,76 |
| 01.09.2010 | 87,12 | 2 671,54 |
| 01.10.2010 | 89,54 | 2 722,15 |
| 01.11.2010 | 90,08 | 2 772,80 |
| 01.12.2010 | 88,22 | 2 761,96 |
| 01.01.2011 | 88,44 | 2 695,52 |
| 01.02.2011 | 90,15 | 2 674,53 |
| 01.03.2011 | 90,94 | 2 631,98 |
| 01.04.2011 | 91,80 | 2 609,66 |
| 01.05.2011 | 94,34 | 2 594,58 |
| 01.06.2011 | 92,54 | 2 597,55 |
| 01.07.2011 | 92,61 | 2 600,00 |
| 01.08.2011 | 92,70 | 2 566,04 |
| 01.09.2011 | 92,63 | 2 673,05 |
| 01.10.2011 | 88,69 | 2 827,10 |
| 01.11.2011 | 91,19 | 2 726,42 |
| 01.12.2011 | 88,26 | 2 764,40 |
| 01.01.2012 | 86,79 | 2 794,43 |
| 01.02.2012 | 88,33 | 2 682,21 |
| 01.03.2012 | 89,84 | 2 600,88 |
| 01.04.2012 | 89,50 | 2 624,78 |
| 01.05.2012 | 89,21 | 2 619,52 |
| 01.06.2012 | 85,48 | 2 773,78 |
| 01.07.2012 | 85,64 | 2 810,45 |
| 01.08.2012 | 85,21 | 2 742,85 |
| 01.09.2012 | 85,85 | 2 772,45 |
| 01.10.2012 | 87,61 | 2 708,58 |
| 01.11.2012 | 87,19 | 2 748,67 |
| 01.12.2012 | 87,47 | 2 716,61 |
| 01.01.2013 | 88,59 | 2 690,63 |
| 01.02.2013 | 89,21 | 2 678,63 |
| 01.03.2013 | 87,61 | 2 682,58 |
| 01.04.2013 | 86,76 | 2 696,73 |
| 01.05.2013 | 87,27 | 2 727,79 |
| 01.06.2013 | 86,72 | 2 739,33 |
| 01.07.2013 | 86,47 | 2 828,23 |
| 01.08.2013 | 86,90 | 2 858,04 |
| 01.09.2013 | 86,77 | 2 884,79 |
| 01.10.2013 | 88,03 | 2 847,35 |
| 01.11.2013 | 88,74 | 2 845,19 |
| 01.12.2013 | 88,06 | 2 922,79 |
| 01.01.2014 | 88,63 | 2 900,64 |
| 01.02.2014 | 87,39 | 3 079,94 |
| 01.03.2014 | 87,25 | 3 145,34 |
| 01.04.2014 | 87,50 | 3 122,51 |
| 01.05.2014 | 87,62 | 3 127,94 |
| 01.06.2014 | 87,32 | 3 033,17 |
| 01.07.2014 | 87,94 | 2 957,38 |
| 01.08.2014 | 86,46 | 3 088,79 |
| 01.09.2014 | 85,31 | 3 150,50 |
| 01.10.2014 | 83,20 | 3 276,79 |
| 01.11.2014 | 81,74 | 3 547,02 |
| 01.12.2014 | 79,97 | 3 994,12 |
| 01.01.2015 | 78,00 | 4 388,09 |
| 01.02.2015 | 74,02 | 5 101,83 |
| 01.03.2015 | 74,92 | 4 590,59 |
| 01.04.2015 | 74,35 | 4 346,94 |
| 01.05.2015 | 76,33 | 3 946,42 |
| 01.06.2015 | 75,86 | 4 018,51 |
| 01.07.2015 | 75,65 | 4 200,53 |
| 01.08.2015 | 74,56 | 4 398,15 |
| 01.09.2015 | 73,76 | 4 903,67 |
| 01.10.2015 | 73,66 | 4 878,80 |
| 01.11.2015 | 73,45 | 4 728,39 |
| 01.12.2015 | 72,22 | 4 784,05 |
| 01.01.2016 | 71,72 | 5 227,18 |
| 01.02.2016 | 71,15 | 5 348,66 |
| 01.03.2016 | 71,34 | 5 356,96 |
| 01.04.2016 | 73,18 | 4 947,33 |
| 01.05.2016 | 73,86 | 4 751,69 |
| 01.06.2016 | 72,99 | 4 823,19 |
| 01.07.2016 | 72,76 | 4 675,36 |
| 01.08.2016 | 72,21 | 4 842,00 |
| 01.09.2016 | 72,71 | 4 719,17 |
| 01.10.2016 | 72,71 | 4 617,54 |
| 01.11.2016 | 72,20 | 4 541,93 |
| 01.12.2016 | 71,26 | 4 628,09 |
| 01.01.2017 | 71,87 | 4 359,16 |
| 01.02.2017 | 72,46 | 4 359,30 |
| 01.03.2017 | 72,60 | 4 206,38 |
| 01.04.2017 | 73,33 | 4 134,27 |
| 01.05.2017 | 73,57 | 4 192,50 |
| 01.06.2017 | 74,18 | 4 192,30 |
| 01.07.2017 | 74,22 | 4 385,49 |
| 01.08.2017 | 74,72 | 4 449,35 |
| 01.09.2017 | 75,36 | 4 425,35 |
| 01.10.2017 | 72,57 | 4 210,36 |
| 01.11.2017 | 69,36 | 4 130,81 |
| 01.12.2017 | 66,94 | 3 904,76 |
| 01.01.2018 | 65,15 | 3 752,94 |
| 01.02.2018 | 66,26 | 3 729,71 |
| 01.03.2018 | 66,44 | 3 698,96 |
| 01.04.2018 | 65,88 | 3 772,89 |
| 01.05.2018 | 63,91 | 3 962,70 |
| 01.06.2018 | 62,75 | 3 927,58 |
| 01.07.2018 | 77.11 | 4 839.26 |
| 01.08.2018 | 77.16 | 4 844.38 |
| 01.09.2018 | 75.79 | 5 160.28 |
| 01.10.2018 | 76.20 | 5 004.49 |
| 01.11.2018 | 75,59 | 4 972,44 |
| 01.12.2018 | 68,55 | 4 567,74 |
| 01.01.2019 | 58,10 | 4 036,05 |
| 01.02.2019 | 59,05 | 3 903,00 |
| 01.03.2019 | 59,12 | 3 888,00 |
| 01.04.2019 | 59,14 | 3 828,25 |
| 01.05.2019 | 58,96 | 3 814,44 |
| 01.06.2019 | 58,74 | 3 821,72 |
| 01.07.2019 | 59,66 | 3 762,96 |
| 01.08.2019 | 124,14 | 7 867,70 |
Subject to separate accounting and management in order to ensure co-financing of voluntary pension savings of citizens of the Russian Federation, as well as ensuring balance (covering the deficit) of the budget of the Pension Fund of the Russian Federation.
Formation of the fund
The National Welfare Fund is formed through:
- oil and gas revenues of the federal budget in an amount exceeding the volume of oil and gas transfers approved for the corresponding financial year, if the accumulated volume of the Reserve Fund reaches (exceeds) its standard value;
- income from managing funds of the National Welfare Fund.
Accommodation
On April 21, 2010, the Chairman of the Government of the Russian Federation V.V. Putin signed a decree of the Russian Government that until February 1, 2012 the Ministry of Finance will not be obliged to publish on the Internet information about the volumes of funds received into the accounts of the Reserve Fund and the National Welfare Fund, about where they are located and how they are used. Some economists believe that the refusal to publish this information is due to the rapid decline in the funds of both funds. Currently, the Ministry of Finance website contains information about the amount of funds in each of the funds.
Dynamics of changes
| date | In billion US dollars | In billion rubles |
|---|---|---|
| 01.02.2008 | 32,00 | 783,31 |
| 01.03.2008 | 32,22 | 777,03 |
| 01.04.2008 | 32,90 | 773,57 |
| 01.05.2008 | 32,72 | 773,82 |
| 01.06.2008 | 32,60 | 773,93 |
| 01.07.2008 | 32,85 | 770,56 |
| 01.08.2008 | 32,69 | 766,48 |
| 01.09.2008 | 31,92 | 784,51 |
| 01.10.2008 | 48,68 | 1 228,88 |
| 01.11.2008 | 62,82 | 1 667,48 |
| 01.12.2008 | 76,38 | 2 108,46 |
| 01.01.2009 | 87,97 | 2 584,49 |
| 01.02.2009 | 84,47 | 2 991,50 |
| 01.03.2009 | 83,86 | 2 995,51 |
| 01.04.2009 | 85,71 | 2 915,21 |
| 01.05.2009 | 86,30 | 2 869,44 |
| 01.06.2009 | 89,86 | 2 784,14 |
| 01.07.2009 | 89,93 | 2 813,94 |
| 01.08.2009 | 90,02 | 2 858,70 |
| 01.09.2009 | 90,69 | 2 863,08 |
| 01.10.2009 | 91,86 | 2 764,37 |
| 01.11.2009 | 93,38 | 2 712,56 |
| 01.12.2009 | 92,89 | 2 769,84 |
| 01.01.2010 | 91,56 | 2 769,02 |
| 01.02.2010 | 90,63 | 2 757,89 |
| 01.03.2010 | 89,63 | 2 684,21 |
| 01.04.2010 | 89,58 | 2 630,27 |
| 01.05.2010 | 88,83 | 2 601,62 |
| 01.06.2010 | 85,80 | 2 616,54 |
| 01.07.2010 | 85,47 | 2 666,41 |
| 01.08.2010 | 88,24 | 2 663,76 |
| 01.09.2010 | 87,12 | 2 671,54 |
| 01.10.2010 | 89,54 | 2 722,15 |
| 01.11.2010 | 90,08 | 2 772,80 |
| 01.12.2010 | 88,22 | 2 761,96 |
| 01.01.2011 | 88,44 | 2 695,52 |
| 01.02.2011 | 90,15 | 2 674,53 |
| 01.03.2011 | 90,94 | 2 631,98 |
| 01.04.2011 | 91,80 | 2 609,66 |
| 01.05.2011 | 94,34 | 2 594,58 |
| 01.06.2011 | 92,54 | 2 597,55 |
| 01.07.2011 | 92,61 | 2 600,00 |
| 01.08.2011 | 92,70 | 2 566,04 |
| 01.09.2011 | 92,63 | 2 673,05 |
| 01.10.2011 | 88,69 | 2 827,10 |
| 01.11.2011 | 91,19 | 2 726,42 |
| 01.12.2011 | 88,26 | 2 764,40 |
| 01.01.2012 | 86,79 | 2 794,43 |
| 01.02.2012 | 88,33 | 2 682,21 |
| 01.03.2012 | 89,84 | 2 600,88 |
| 01.04.2012 | 89,50 | 2 624,78 |
| 01.05.2012 | 89,21 | 2 619,52 |
| 01.06.2012 | 85,48 | 2 773,78 |
| 01.07.2012 | 85,64 | 2 810,45 |
| 01.08.2012 | 85,21 | 2 742,85 |
| 01.09.2012 | 85,85 | 2 772,45 |
| 01.10.2012 | 87,61 | 2 708,58 |
| 01.11.2012 | 87,19 | 2 748,67 |
| 01.12.2012 | 87,47 | 2 716,61 |
see also
- Budget Code of the Russian Federation
Notes
Links
- Dynamics of changes in the National Welfare Fund on the website of the Russian Ministry of Finance
Wikimedia Foundation. 2010.
- Robertson, David (conductor)
- Agdash district
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INTRODUCTION………………………………………………………………………………3
1.1 The concept of a reserve fund, its functions and tasks………………………....6
1.2 Reserve funds of different countries of the world……………………………….……...10
2.1 Formation and use of funds from the fund …………………………..14
2.2 Fund management……………………………………………..17
2.3. Reporting and audit of the Fund …………………………………………………26
3.1 Analytical information about the funds of the fund …………………………..30
3.2 Availability of information about the Fund……………………………………………………36
3.3 Problems and prospects for the development of the Fund……………………………...38
CONCLUSION……………………………………………………………...45
LIST OF REFERENCES………………………...48
APPLICATIONS………………………………………………………………………………..51
INTRODUCTION
The State Reserve Accumulation Fund is a special monetary fund that is used to stabilize the state budget during periods of declining government revenues and/or for government needs in the long term. The official names of such funds vary; the most common ones are the stabilization fund and the fund for future generations.
Reserve funds are created in those states whose budget is highly dependent on market factors, as a rule, world prices for raw materials. In addition, some countries accumulate funds in such funds for the period when the mineral resources are depleted.
The reserve fund performs two functions. Firstly, its funds can be used to cover the state budget deficit at a time of unfavorable market conditions. Secondly, during a period of high prices for raw materials, the fund allows you to accumulate excess export earnings and prevent the development of the Dutch economic disease.
The thesis about excess export earnings may seem paradoxical. An increase in export earnings usually leads to a rapid strengthening of the national currency. In itself, such a strengthening is not a threat to the economy, however, constant fluctuations in exchange rates following fluctuations in price conditions create macroeconomic instability and do not allow companies to choose a certain strategy - to adapt to a low or high exchange rate. In addition, in conditions of high administrative barriers and strong monopolism (which is typical for most resource-exporting countries), an increase in export earnings leads to increased inflation.
In addition to purely economic tasks, the reserve fund fulfills the political task of preventing the rapid growth of government spending. Government spending, as a rule, cannot be quickly reduced following a drop in income. As a result, during periods of unfavorable economic conditions, this can lead to large state budget deficits, failure to fulfill promised social obligations and default on government debts. Such consequences are much more destructive for the economy than fluctuations in the volume of the state budget themselves.
The need to create reserve funds is debatable. A number of economists and politicians believe that it is more effective not to keep money in reserve, but to use it for import purchases that work for the future of the country: for example, buying patents and equipment, paying for student education abroad, etc. This tactic allows you to avoid the negative consequences of a favorable market conditions, without resorting to actual freezing of funds in the reserve fund.
Thus, we can conclude that the chosen topic is relevant.
The purpose of this course work is to identify the features of the formation and use of the national welfare fund of the Russian Federation. To achieve this goal, it is necessary to solve the following tasks:
Study the concepts of a reserve fund, its functions and tasks;
Consider the reserve funds of different countries of the world;
Study the conditions and principles of the formation and use of the fund’s funds;
Consider the fund management system;
Study the reporting and audit of the Fund;
Conduct an analysis of analytical information about the funds of the fund;
Study the availability of information about the Fund;
Study the problems and prospects for the development of the Fund.
The subject of research in this course work is the processes of formation and use of financial resources of state reserve funds.
The object of the study is the National Welfare Fund of the Russian Federation.
To write this course work, modern economic periodical literature, Internet resources, and legal acts were used.
1. THEORETICAL BASIS FOR THE FORMATION AND USE OF RESERVE FUNDS
1.1 The concept of a reserve fund, its functions and tasks
The expenditure side of budgets at all levels of the budget system of the Russian Federation provides for the creation of reserve funds: executive authorities; local government bodies.
Budget reserve funds are a separate part of funds in budgets of all levels, in the form of target budget funds designed to ensure uninterrupted financing of both previously foreseen expenses and unforeseen expenses that arose suddenly and are of an emergency or accidental nature.
The reserve funds are used to finance unforeseen expenses, including emergency restoration work to eliminate the consequences of natural disasters and other emergencies that occurred in the current financial year.
The reserve fund performs two functions. Firstly, its funds can be used to cover the state budget deficit at a time of unfavorable market conditions. Secondly, during a period of high prices for raw materials, the fund allows you to accumulate excess export earnings and prevent the development of the Dutch disease of the economy.
The procedure for their expenditure is established by regulatory legal acts of the Government of the Russian Federation, executive authorities of constituent entities of the Russian Federation or local governments.
Reserve funds are designed to:
- ensure uninterrupted financing of the activities provided for in the budget even in cases where budget revenues are lower than planned;
- contribute to maintaining a balance between budget revenues and expenditures, directly influencing its sustainability;
- act as one of the sources of compensation for damage caused to state and municipal property by natural forces;
- maneuver cash in order to eliminate intra-annual cash gaps;
- satisfy newly emerging urgent needs, eliminate imbalances that arise during budget execution.
Being a type of financial reserves, budget reserve funds are characterized by specific features:
- they belong to the centralized reserves of society and have a wide scope of application;
- they are distinguished by the scale of their influence on the reproduction process, since they contribute to the stability of the country’s economy as a whole, maintaining the stable functioning of its industries in the event of emergency and unforeseen events;
- their education is always mandatory and legally established;
- they are universal in areas of use, because are designed to provide for any additional need for funds that arises in the budget of any level due to the occurrence of emergency and unforeseen events.
The source of formation of reserve funds is funds accumulated in budgets of all levels.
The formation of budget reserves is reflected in the expenditure side of the budget, in some cases it is shown in the balance of budget income and expenses. However, the inclusion of budget reserves in the expenditure side of the budget does not mean that they are a regular budget expense, since they represent a kind of reserve of budget resources that are mobilized into the budget, but reserved in case of the need for additional financing associated with the occurrence of unplanned expenses in the process of budget execution.
In contrast to ordinary budget expenditures, which are gradually and continuously carried out during the budget year, they are used only during the occurrence of certain types of events and circumstances. If such events do not occur during the budget year, then these funds remain unclaimed and must be transferred to the next year as an element of national wealth.
Reserve funds of executive authorities of the Russian Federation and constituent entities of the Russian Federation are created in the federal and regional budgets, and reserve funds of local self-government bodies are created in local budgets.
The size of reserve funds in the federal budget cannot exceed 3% of approved federal budget expenditures.
The size of reserve funds in the budgets of the constituent entities of the Russian Federation is established by the legislative (representative) authorities of the constituent entities of the Russian Federation when approving regional budgets for the next financial year.
The use of reserve funds is based on the decisions of those state authorities and local governments at whose disposal they were created. Funds are used to finance unforeseen expenses.
The form of expenditure of reserve funds is determined by the functional purpose of the allocated resources. The procedure for spending reserve funds is established by regulations of the Government of the Russian Federation, executive authorities of constituent entities of the Russian Federation and local governments. They are obliged to inform the relevant bodies of legislative (representative) power and local self-government on a quarterly basis about the expenditure of reserve funds.
Thanks to such information, at all levels of the budget system of the Russian Federation, ongoing control is carried out by the legislative (representative) authorities and local government over the targeted and rational use of reserve funds.
The functioning of reserve funds in the budgets of all levels of the budget system, the versatility of their purpose requires the creation of various types of reserve funds. This is explained by the different composition of powers assigned to each level of government, on which the need for reserves depends and what is associated with the differentiation of types and purposes of use. In addition, the existence of many types of budget reserves is caused by a large number of unforeseen events and circumstances, the maintenance of which is entrusted to them.
In Russia, the budget reserve funds include: the Reserve Fund of the President of the Russian Federation, reserve funds of the presidents of the republics within the Russian Federation, reserve funds of executive authorities. The excess of income over expenses generated during budget execution can also be used as a reserve.
Reserve funds according to their functional purpose are divided into: strategic, insurance and operational.
Strategic budget reserves are intended to finance large-scale expenditures designed for the future: the development of promising high-tech industries, the development of newly discovered mineral deposits, and strengthening the country's defense capability. Funds from the reserve fund of the President of the Russian Federation and the reserve fund of the Government of the Russian Federation are partially used for these purposes.
Insurance budget reserves make it possible to ensure the uninterrupted development of the economy and the livelihoods of the population in the event of large-scale natural disasters and catastrophes, and compensate for the damage caused by such extraordinary events. These primarily include the Reserve Fund of the Government of the Russian Federation for the Prevention and Elimination of Emergency Situations and the Consequences of Natural Disasters, which performs the functions of a centralized insurance fund. Similar funds can be created in the budgets of constituent entities of the Russian Federation.
Operating budget reserves are formed for the purpose of financing unforeseen urgent events, eliminating intra-annual cash gaps, etc. To solve these problems, contingency funds, circulating cash, etc. are created in the budgets.
Thus, we examined the concept of “reserve fund”, found out that their creation is provided for in the expenditure side of the budgets of all levels of the budget system of the Russian Federation, since they are necessary to ensure uninterrupted financing of both previously foreseen expenses and unforeseen expenses that arose suddenly and have an emergency or random. The procedure for their expenditure is established by regulatory legal acts of the Government of the Russian Federation, executive authorities of constituent entities of the Russian Federation or local governments.
We also found out that in Russia the budget reserve funds include: the Reserve Fund of the President of the Russian Federation, reserve funds of the presidents of the republics within the Russian Federation, reserve funds of executive authorities.
1.2 Reserve funds around the world
The Alaska Permanent Petroleum Fund was created in 1976 following a referendum among state residents. The fund receives 25% of the funds received by the state government from oil companies (taxes, drilling licenses, fees for using the oil pipeline), and part of the profits goes to dividends to Alaska residents.
At the end of 2005, its volume amounted to $32 billion, and dividends were $845 per person. The fund's return over the past five years was 5.78%. The portfolio includes US stocks (35%), US bonds (25%), securities of other countries (22%), real estate (10%) and other investments (8%).
The State Oil Fund of Azerbaijan was founded on December 29, 1999. The fund concentrates funds received from the export of oil and gas, as well as from the financial activities of the fund itself. As of April 1, 2010, the fund contains funds totaling 16 billion 243 million 300 thousand dollars.
In 1998, the Macroeconomic Stabilization Fund was created in Venezuela. Initially, the criteria for filling the fund were formulated quite strictly: if the world oil price exceeds the standard ($14.7 per barrel), then every dollar in excess goes into the fund. Subsequently, the rules for transferring funds to the fund changed, and the state budget was reduced to a constant deficit. By 2003, they managed to accumulate $2.59 billion, but the government of Hugo Chavez soon spent this money and now the fund does not actually function.
There are two funds in Kuwait - the Budget Reserve Fund (since 1960) and the Reserve Fund for Future Generations (since 1976). 10% of government revenues (regardless of their origin and oil prices) are transferred to the Fund for Future Generations. By the end of 2004, the volume of both funds reached $80 billion (about 170% of GDP). The nature of the placement of the funds' funds is not disclosed, although it is known that the money is invested in securities of developed countries. It was from these funds that Kuwait financed the reconstruction of the country after the 1990-1991 war.
In Norway, the State Oil Fund was created in 1990. It serves as both a stabilization fund and a “fund for future generations.” The procedure for filling the fund is determined by the government and approved annually by parliament; about half of the oil revenues of the state budget go into it.
At the beginning of 2006, the fund had accumulated $220 billion (75% of GDP). The return on the Oil Fund in 2005 was 8.58%. On average over nine years it was 4.47%, and in 2001-2002 the fund suffered losses. About 46% of the fund is invested in stocks and the rest in bonds.
The Norwegian government pursues a very strict policy of replenishing the State Oil Fund. As a result, the relationship between the influx of petrodollars and budget expenditures has even become inverse: the higher oil prices, the lower budget expenditures, and vice versa.
In Oman, the State Reserve Fund was created in 1980, and in 1993, the Oil Fund was also created. At the same time, all oil revenues at a price of up to $15 per barrel go to the budget, the next $2 per barrel - to the State Reserve Fund, the next $0.5 per barrel - to the Oil Fund, and at a price above $17.5 per barrel, excess oil revenues again go to budget. However, it was never possible to fill the funds, since their funds were constantly used to cover the budget deficit.
The Chilean Copper Stabilization Fund was created in 1985. Every year, the Chilean Ministry of Finance sets an indicative (base) price for copper. If the real export price exceeds it, then the excess income is transferred from the budget to the fund. At the beginning of 2006, the fund had accumulated over $1 billion.
In Russia, the Stabilization Fund has existed since 2004. Government revenues from oil production and export (in terms of export duties and mineral extraction tax) are transferred to it when the world price of oil exceeds a specially defined “cut-off price”. That is, the state budget receives funds as if the price of oil was equal to the “cut-off price,” and everything in excess goes to the Stabilization Fund. Initially, the cut-off price was set at $20 per barrel, then raised to $27.
From February 1, 2008, the stabilization fund was divided into two parts: the Reserve Fund $125.41 billion (RUB 3,069 billion) and the National Welfare Fund $31.98 billion (RUB 782.8 billion).
The National Welfare Fund is part of the federal budget. The fund is intended to become part of a sustainable mechanism for pension provision for citizens of the Russian Federation for the long term. The goals of the National Welfare Fund are to ensure co-financing of voluntary pension savings of citizens of the Russian Federation and to ensure balance (covering the deficit) of the budget of the Pension Fund of the Russian Federation.
Thus, we examined examples of reserve funds from different countries of the world: the reserve fund of Alaska, the state oil fund of Azerbaijan, the macroeconomic stabilization fund of Venezuela, the budget reserve fund and the reserve fund for future generations of Kuwait, the state oil fund of Norway, the state reserve and oil funds of Oman, copper the stabilization fund of Chile, as well as the national welfare fund of the Russian Federation.
2. NATIONAL WEALTH FUND OF THE RUSSIAN FEDERATION: PRINCIPLES OF FORMATION, FUNDAMENTALS OF MANAGEMENT AND DIRECTIONS OF USE
2.1 Formation and use of funds from the fund
The formation of the Fund occurs as follows.
Oil and gas revenues of the federal budget are generated through:
Tax on the extraction of mineral resources in the form of hydrocarbon raw materials (oil, combustible natural gas, gas condensate);
Export customs duties on crude oil;
Export customs duties on natural gas;
Export customs duties on goods produced from oil.
A certain part of these oil and gas revenues in the form of oil and gas transfers is annually used to finance federal budget expenses. The amount of oil and gas transfer is approved by the federal law on the federal budget for the next financial year and planning period in an absolute amount, calculated as 3.7% of the volume of gross domestic product forecast for the corresponding year, specified in the federal law on the federal budget for the next financial year and planning period.
After filling the Reserve Fund to the specified amount, oil and gas revenues are sent to the National Welfare Fund.
From January 1, 2010 to January 1, 2014, the standard value of the Reserve Fund is not determined, oil and gas revenues of the federal budget are not used to financially support oil and gas transfers and for the formation of the Reserve Fund and the National Welfare Fund, but are directed to financially support federal budget expenditures .
Another source of formation of the National Welfare Fund is income from the management of its funds.
From January 1, 2010 to February 1, 2014, income from the management of funds of the National Welfare Fund is not credited to the Fund, but is directed to financial support for federal budget expenditures .
Funds from oil and gas revenues of the federal budget, the Reserve Fund and the National Welfare Fund are accounted for in separate accounts for the accounting of federal budget funds opened by the Federal Treasury in the Central Bank of the Russian Federation.
From January 1, 2010 to January 1, 2014, separate accounting of oil and gas revenues from the federal budget is not carried out .
Calculations and transfers of funds in connection with the formation and use of oil and gas revenues of the federal budget, oil and gas transfers, funds of the Reserve Fund and the National Welfare Fund are carried out by the Ministry of Finance of the Russian Federation in the manner established by the Government of the Russian Federation.
From January 1, 2010 to January 1, 2014, the procedure for settlements and transfers of funds in connection with the formation and use of oil and gas revenues of the federal budget, oil and gas transfers, funds of the Reserve Fund and the National Welfare Fund was suspended .
Accounting for transactions with oil and gas revenues of the federal budget, funds from the Reserve Fund and the National Welfare Fund is carried out in the manner established for accounting for transactions with funds from the federal budget.
The Fund's funds are used as follows.
Funds from the National Welfare Fund can be used to co-finance voluntary pension savings of Russian citizens and ensure balance (covering the deficit) of the budget of the Pension Fund of the Russian Federation. The amount of funds from the National Welfare Fund allocated for these purposes is established by the federal law on the federal budget for the next year and planning period.
The procedure for co-financing voluntary pension savings of citizens of the Russian Federation is defined in the Federal Law of April 30, 2008 No. 56-FZ “On additional insurance contributions for the funded part of the labor pension and state support for the formation of pension savings.”
The Government of the Russian Federation has the right, until January 1, 2014, without amending the federal law on the federal budget, to direct funds from the Fund to make payments that reduce debt obligations, reduce borrowing and ensure the balance of the federal budget, including in excess of the total volume of federal budget expenditures in the event and within the limits of increasing budgetary allocations of the federal budget for the provision of interbudgetary transfers in order to ensure the balance of the budgets of state extra-budgetary funds of the Russian Federation .
Thus, we found out that the national wealth fund is formed from oil and gas revenues and income from fund management, and we studied the procedure for their enrollment. We also found out that funds from the National Welfare Fund can be used to co-finance voluntary pension savings of Russian citizens and ensure balance (covering the deficit) of the budget of the Pension Fund of the Russian Federation.
2.2 Fund management
The goals of managing the funds of the National Welfare Fund are to ensure the safety of the Fund’s assets and a stable level of income from its placement in the long term. Management of the Fund's assets for these purposes allows for the possibility of obtaining negative financial results in the short term .
The funds of the National Welfare Fund are managed by the Ministry of Finance of the Russian Federation in the manner established by the Government of the Russian Federation. Certain powers to manage the funds of the National Welfare Fund may be exercised by the Central Bank of the Russian Federation. In the case of attracting specialized financial organizations to exercise certain powers to manage the funds of the National Welfare Fund, the procedure for attracting these organizations, as well as the requirements for them, are established by the Government of the Russian Federation .
The funds of the National Welfare Fund can be managed in the following ways (both individually and simultaneously) :
1) by purchasing foreign currency at the expense of the Fund and placing it on accounts for recording funds of the National Welfare Fund in foreign currency (US dollars, euros, pounds sterling) in the Central Bank of the Russian Federation. For the use of funds in these accounts, the Central Bank of the Russian Federation pays interest established by the bank account agreement;
2) by placing the Fund’s funds in foreign currency and financial assets denominated in Russian rubles and permitted foreign currency (hereinafter referred to as permitted financial assets).
The Ministry of Finance of the Russian Federation manages the funds of the National Welfare Fund in accordance with the first method, that is, by placing funds in foreign currency accounts with the Central Bank of the Russian Federation as follows. According to the procedure for calculating and crediting interest accrued to accounts for accounting for funds of the National Welfare Fund in foreign currency, approved by the Ministry of Finance of the Russian Federation, the Bank of Russia pays interest on the balances on these accounts equivalent to the yield of indices formed from financial assets in which the Fund’s funds can be placed national welfare, the requirements for which are approved by the Government of the Russian Federation.
The Government of the Russian Federation establishes maximum shares of permitted financial assets in the total volume of allocated funds of the National Welfare Fund. In order to improve the efficiency of managing the funds of the National Welfare Fund, the Ministry of Finance of the Russian Federation is authorized to approve the regulatory shares of permitted financial assets in the total volume of allocated funds of the National Welfare Fund within the limits of the corresponding shares established by the Government of the Russian Federation (Appendix 1)
The Government of the Russian Federation has established the following requirements for these financial assets :
1. funds of the National Welfare Fund can be placed in debt obligations in the form of securities of foreign states, foreign government agencies and central banks of the following countries :
· Austria;
· Belgium;
· Great Britain;
· Germany;
· Canada;
· Luxembourg;
· Netherlands;
· Finland;
· France;
· Sweden.
2. debt obligations must meet the following requirements:
Foreign issuers of debt obligations must have a long-term credit rating of no lower than “AA-” according to the classification of rating agencies Fitch Ratings or Standard & Poor’s, or no lower than “Aa3” according to classification of the rating agency Moody's Investors Service. If a foreign issuer of debt obligations is assigned different long-term creditworthiness ratings by the specified agencies, then the lowest of the assigned ones is accepted as the long-term creditworthiness rating;
Russian issuers of debt obligations must have a long-term credit rating of no lower than "BBB-" according to the classification of rating agencies Fitch Ratings or Standard & Poor's, or no lower than "BaaZ" according to classification of the rating agency "Moody's Investors Service". If the Russian issuer of debt obligations is assigned different long-term creditworthiness ratings by the above agencies, then the lowest of the assigned ones is accepted as the long-term creditworthiness rating;
The maturity dates of debt issues are fixed, the terms of issue and circulation do not provide for the issuer's right to repurchase (repay) them ahead of schedule;
The terms of issue and circulation of debt obligations of foreign issuers do not provide for the right of the owner of debt obligations to present them early for redemption (redemption) by the issuer;
The standards for the minimum and maximum periods before repayment of debt issues established by the Ministry of Finance of the Russian Federation are mandatory;
The rate of coupon income paid on coupon debt obligations, as well as the denominations of debt obligations, are fixed;
The nominal value of debt obligations is fixed and is expressed in Russian rubles, US dollars, euros or pounds sterling, payments on debt obligations are made in the currency of the nominal value;
The volume of issue of debt obligations in circulation is at least 1 billion rubles for debt obligations denominated in Russian rubles, 1 billion US dollars for debt obligations denominated in US dollars, at least 1 billion euros for debt obligations, denominated in euros, and at least 0.5 billion pounds sterling - for debt instruments denominated in pounds sterling;
Debt issues are not issues intended for private (non-public) placement.
3. International financial organizations in whose debt obligations the funds of the National Welfare Fund can be placed include debt obligations (including those issued by securities) of the following institutions:
Asian Development Bank (ABD);
Development Bank of the Council of Europe (Council of Europe Development Bank, CEB);
European Bank for Reconstruction and Development (EBRD);
European Investment Bank (EIB);
Inter-American Development Bank (IADB);
International Finance Corporation (IFC);
International Bank for Reconstruction and Development (IBRD);
Nordic Investment Bank (NIB).
4. Shares of legal entities and shares (participatory interests) of investment funds in which funds of the National Welfare Fund can be placed must meet the following requirements:
Shares of legal entities must be listed on at least one stock exchange;
Shares of foreign issuers must be included in the lists of securities used to calculate the MSCI World Index and FTSE All-World Index stock indices;
Shares of Russian issuers must be included in the lists of securities used to calculate the RTS Index or MICEX Index stock indices;
The assets of investment funds that have issued units (participation interests) must include only permitted financial assets.
5. When placing funds of the National Welfare Fund on deposits and bank accounts in banks and credit institutions, the following requirements must be met:
The bank or credit institution must have a long-term credit rating of not lower than “AA-” according to the classification of the rating agencies “Fitch-Ratings” or “Standard & Poor’s” or not lower than “Aa3” according to the classification of the rating agency Moody's Investors Service agency. If a bank or credit organization is assigned different long-term creditworthiness ratings by the specified agencies, then the lowest of the assigned ones is accepted as the long-term creditworthiness rating;
The standards for the minimum and maximum periods for placing funds of the National Wealth Fund on deposits in banks and credit institutions, established by the Ministry of Finance of the Russian Federation, are mandatory;
6. When placing funds of the National Welfare Fund on deposits in the state corporation "Bank for Development and Foreign Economic Affairs (Vnesheconombank)", the following requirements must be met:
a) funds can be placed on deposits in Russian rubles, US dollars, euros and pounds sterling;
b) the maximum permissible total amount within which funds can be placed on deposits in Russian rubles is 655 billion rubles, in which case:
Up to 175 billion rubles can be placed on deposits, the amounts, terms and other essential conditions for which are determined by the Ministry of Finance of the Russian Federation ;
Up to 410 billion rubles can be placed on deposits in the manner established by the Government of the Russian Federation, on the following conditions :
Up to 40 billion rubles can be placed on deposits at a rate of 6.25 percent per annum for a period until June 1, 2020 in the manner established by the Government of the Russian Federation ;
Up to 30 billion rubles can be placed on deposits at a rate of 6.25 percent per annum for a period until December 31, 2017 in the manner established by the Government of the Russian Federation .
Payment of interest on the placement of funds during the entire period is carried out quarterly.
The possibility of early return of funds is allowed with the consent of the state corporation "Bank for Development and Foreign Economic Affairs (Vnesheconombank)", while interest on the placement of funds is paid for the actual period of the funds being on deposit.
c) the amounts and terms of placement of funds are determined by the Ministry of Finance of the Russian Federation, taking into account the specified requirements; placement of funds on deposits is carried out by the Federal Treasury by decision of the Ministry of Finance of the Russian Federation.
Information on the placement of funds of the National Wealth Fund on deposits in the state corporation "Bank for Development and Foreign Economic Affairs (Vnesheconombank)" is published in the "Statistics" subsection.
7. The Ministry of Finance of the Russian Federation has the right to establish additional requirements for permitted financial assets within the limits of the requirements established by the Government of the Russian Federation.
In accordance with the powers granted by the Government of the Russian Federation, the Ministry of Finance of the Russian Federation approved :
1. maximum shares in the total funds of the Fund:
In Russian rubles - 40%;
In foreign currency - 100%.
2. the regulatory currency structure of the funds of the National Welfare Fund in foreign currency in the following composition:
3. current deadlines until the repayment of issues of debt obligations of foreign states, debt obligations allowed for the placement of funds of the National Welfare Fund :
For debt instruments denominated in US dollars and euros:
For debt denominated in pounds sterling:
The terms indicated above are valid at the time of acquisition of debt obligations at the expense of the National Wealth Fund or at the time of formation of indices from debt obligations used to calculate the amounts of interest accrued on the balances of funds in the accounts for accounting the funds of the National Welfare Fund in permitted foreign currencies, opened by the Federal Treasury at the Central Bank of the Russian Federation.
4. list of foreign government agencies in whose debt obligations funds of the National Welfare Fund can be placed (in agreement with the Central Bank of the Russian Federation) :
Austrian Export-Import Bank (Oesterreichische Kontrollbank Aktiengesellschaft, OKB);
Public Credit Agency, Spain (Instituto de Credito Oficial, ICO);
Motorway and Motorway Financing Agency, Austria (Autobahnen- und Schnellstrassen- Finanzierungs- Aktiengesellschaft, ASFINAG);
Group of Banks for Reconstruction and Development, Germany (Kreditanstalt fur Wiederaufbau Bankengruppe);
Canadian Export Development Agency (EDC);
Communal Bank of the Netherlands (Bank Nederlandse Gemeenten, BNG);
Society for Medium Term Finance of the Railway Network, UK (Network Rail MTN Finance CLG (Plc));
Agricultural Rentenbank, Germany (Landwirtschaftliche Rentenbank);
Federal Home Loan Mortgage Corporation, Freddie Mac;
Federal National Mortgage Association, USA (Federal National Mortgage Association, Fannie Mae);
Federal Home Loan Banks, USA (FHLBanks);
Federal Farm Credit Banks, USA (FFCB);
Municipal Credit Fund, France (Dexia Group);
Social Security Debt Service Fund, France (Caisse d'Amortissement de la Dette Sociale, CADES);
French Mortgage Fund (Credit Foncier de France, CFF).
5. the nominal volume of acquired debt obligations of one issue should not exceed 5% of the nominal volume of this issue .
Thus, we have found out that the goals of managing the funds of the National Welfare Fund are to ensure the safety of the Fund’s assets and a stable level of income from its placement in the long term. The funds of the National Welfare Fund are managed by the Ministry of Finance of the Russian Federation in the manner established by the Government of the Russian Federation. Certain powers to manage the funds of the National Welfare Fund may be exercised by the Central Bank of the Russian Federation. We also studied the principles and procedures for managing the Fund.
2.3 Reporting and auditing of the Fund
From January 1, 2010 to January 1, 2014, the Ministry of Finance of the Russian Federation does not publish information on the receipt and use of oil and gas revenues of the federal budget, as well as on the transfer of funds to the Reserve Fund and the National Welfare Fund .
The Ministry of Finance of the Russian Federation, as part of reporting on the execution of the federal budget, submits to the Government of the Russian Federation a quarterly and annual report on the receipt and use of oil and gas revenues of the federal budget, the formation and use of funds from the National Welfare Fund, as well as a quarterly and annual report on the management of the funds of the said fund.
From January 1, 2010 to January 1, 2014, transactions with oil and gas revenues of the federal budget are not carried out and are not reflected in the reporting of the Ministry of Finance of the Russian Federation on the execution of the federal budget .
The Government of the Russian Federation, as part of reporting on the execution of the federal budget, submits to the State Duma of the Federal Assembly of the Russian Federation and the Federation Council of the Federal Assembly of the Russian Federation a quarterly and annual report on the receipt and use of oil and gas revenues of the federal budget, the formation and use of funds from the National Welfare Fund, as well as quarterly and annual report on the management of the funds of the specified fund.
From January 1, 2010 to January 1, 2014, the Government of the Russian Federation does not provide a report on the receipt and use of oil and gas revenues of the federal budget, the formation of the Reserve Fund and the National Welfare Fund as part of reporting on the execution of the federal budget .
In the process of executing the federal budget, the Accounts Chamber of the Russian Federation carries out control measures to verify the formation, use and management of funds from the National Welfare Fund. The Accounts Chamber of the Russian Federation quarterly submits to the Federal Assembly of the Russian Federation an operational report on the progress of execution of the federal budget, which provides actual data on the generation of income and expenses incurred, including the formation, use and management of funds from the National Welfare Fund.
Calculations and transfers of funds in connection with the formation and use of oil and gas revenues of the federal budget, oil and gas transfers, funds of the Reserve Fund and the National Welfare Fund are carried out by the Ministry of Finance of the Russian Federation in the manner established by the Government of the Russian Federation.
Funds from the National Welfare Fund can be used to co-finance voluntary pension savings of Russian citizens and ensure balance (covering the deficit) of the budget of the Pension Fund of the Russian Federation.
The funds of the National Welfare Fund are managed by the Ministry of Finance of the Russian Federation in the manner established by the Government of the Russian Federation. Certain powers to manage the funds of the National Welfare Fund may be exercised by the Central Bank of the Russian Federation.
The Ministry of Finance of the Russian Federation publishes monthly information on the receipt and use of oil and gas revenues of the federal budget, the amount of assets of the National Welfare Fund at the beginning of the reporting month, the transfer of funds to the specified fund, their placement and use in the reporting month.
From January 1, 2010 to January 1, 2014, the Ministry of Finance of the Russian Federation does not publish information on the receipt and use of oil and gas revenues of the federal budget, as well as on the transfer of funds to the Reserve Fund and the National Welfare Fund.
Thus, we examined the features of auditing and reporting on the Fund. We found out that the Ministry of Finance of the Russian Federation, as part of reporting on the execution of the federal budget, submits to the Government of the Russian Federation a quarterly and annual report on the receipt and use of oil and gas revenues of the federal budget, the formation and use of funds from the National Welfare Fund, as well as a quarterly and annual report on the management of funds of the specified fund.
3. CURRENT STATE AND DEVELOPMENT PROSPECTS OF THE NATIONAL WEALTH FUND IN RUSSIA
3.1 Analytical information and funds of the Fund
As of December 1, 2009, the total volume of the National Welfare Fund amounted to 2,769.84 billion rubles, which is equivalent to 92.89 billion US dollars. As of December 1, 2009, the fund balances were (Appendix 2):
1) on separate accounts for recording funds of the National Welfare Fund in the Bank of Russia:
· 32.27 billion US dollars;
· 23.04 billion euros;
· 4.16 billion pounds sterling;
2) on deposits with Vnesheconombank:
· 582.79 billion rubles.
The total estimated amount of income from the placement of funds of the National Welfare Fund, converted into US dollars, for the period from January 15, 2009 to November 30, 2009 amounted to 1.35 billion US dollars, which is equivalent to 40.20 billion rubles. The estimated amounts of interest income from placing the fund's funds in separate accounts in foreign currency amounted to (in the account currency and ruble equivalent): 0.37 billion US dollars (10.98 billion rubles); 0.53 billion euros (23.29 billion rubles); 0.12 billion pounds sterling (5.94 billion rubles). The exchange rate difference from the revaluation of balances in accounts for the accounting of funds of the National Wealth Fund in foreign currency for the period from January 15, 2009 to November 30, 2009 amounted to a positive value - 2.83 billion rubles.
The total volume of the National Welfare Fund as of November 1, 2010 amounted to 2,772.80 billion rubles, which is equivalent to 90.08 billion US dollars, including:
1) on separate accounts for the accounting of funds of the National Welfare Fund in the Bank of Russia the following is placed:
US$31.86 billion;
24.67 billion euros;
£4.48 billion;
2) placed on deposits with Vnesheconombank:
434.02 billion rubles;
US$2.75 billion.
434.02 billion rubles and 2.75 billion US dollars were transferred from accounts accounting for funds of the National Wealth Fund to be placed on deposits with Vnesheconombank (Table 1):
· 285.61 billion rubles – for deposits with a repayment period no later than December 31, 2019 and an interest rate of 6.25% per annum;
· 118.42 billion rubles – for deposits with a repayment period no later than December 25, 2020 and an interest rate of 7.25% per annum;
· 30.00 billion rubles – on a deposit with a repayment period until December 25, 2017 and an interest rate of 6.25% per annum;
· US$2.75 billion – for deposits with a maturity until October 31, 2011 and a floating interest rate exceeding the six-month LIBOR rate by 2.75 percentage points.
In October 2010, the federal budget received income from placing funds of the National Welfare Fund on deposits with Vnesheconombank in the amount of 7.78 billion rubles or 0.26 billion US dollars. The total income from placing the fund's funds on deposits with Vnesheconombank from January to October 2010 amounted to 24.94 billion rubles or 0.82 billion US dollars.
Table 1
Information on the placement of funds of the National Welfare Fund on deposits in the state corporation "Bank for Development and Foreign Economic Affairs (Vnesheconombank)"
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| Direction of use by Vnesheconombank of funds placed on deposits | Maximum allowed aggregate placement amount | Actually posted | Deadline for return of deposits | Interest rate, % per annum | Frequency of interest payments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Providing subordinated loans (loans) to Russian credit organizations |
Appendix 2 The total volume of funds of the National Welfare Fund
Appendix 3 Information on the movement of funds in the Federal Treasury account with the Bank of Russia for accounting funds of the National Welfare Fund in US dollars for 2010
Appendix 4 Information on the movement of funds through the Federal Treasury account with the Bank of Russia for accounting for funds of the National Welfare Fund in rubles for 2009-2010
Appendix 5 Information on the movement of funds in the Federal Treasury account with the Bank of Russia for accounting for funds of the National Welfare Fund in euros for 2010
Appendix 6 Information on the movement of funds in the Federal Treasury account with the Bank of Russia for accounting for funds of the National Welfare Fund in pounds sterling for 2010
The specified regulatory shares are applied when placing funds of the National Welfare Fund in permitted financial assets denominated in foreign currency. The specified regulatory shares are applied when placing funds of the National Welfare Fund in permitted financial assets denominated in Russian rubles, with the maximum share of these funds being 40% of the total funds of the fund. The total volume of funds of the National Welfare Fund, expressed in Russian rubles and US dollars, corresponds to the sum of the balances in the accounts of the Federal Treasury in the Central Bank of the Russian Federation for accounting of funds of the National Welfare Fund and funds placed on deposits with Vnesheconombank, recalculated at official foreign exchange rates established by the Central Bank of the Russian Federation as of the date preceding the reporting date, and cross rates calculated on the basis of the indicated rates. This indicator does not take into account the estimated amounts of interest income for the expired part of the interest period on accounts in foreign currency with the Central Bank of the Russian Federation and on deposits with Vnesheconombank. http://www.minfin.ru/ru/nationalwealthfund/statistics/balances/2010/ http://www.minfin.ru/ru/nationalwealthfund/statistics/balances/2010/ http://www.minfin.ru/ru/nationalwealthfund/statistics/balances/2010/ http://www.minfin.ru/ru/nationalwealthfund/statistics/balances/2010/ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
According to officially published data from the Ministry of Finance, the Russian National Welfare Fund in August decreased by $2.24 billion, or 3.07%. In absolute figures, the country's reserves are estimated at $70.69 billion.
A month earlier, reserves lost $3.9 billion, or 5.08%. Thus, the National Welfare Fund of Russia and the Ministry of Finance’s reserves have been reduced for the second month in a row. In June, on the contrary, they increased by $0.58 billion, which is explained by less volatility in the financial and commodity markets.
Russia's National Welfare Fund: a year of decline
The general trend towards a decrease in the value of the country’s reserves has finally taken hold since September 2014. With minor adjustments, it has been going on for twelve months. In total, during this period the country lost $21.03 billion, or 22.9% of the National Welfare Fund. 
When analyzing these figures, it is necessary to take into account a fundamentally important point. Today's figure of $70.69 billion is not exactly the amount that the Treasury Department can dispose of at any moment. It's not just the volume of money that matters, but also where it is actually placed.
These numbers, denominated in different currencies, are difficult to understand, but not impossible. First of all, we note that the money is in accounts with the Bank of Russia, and this is a 100% real reserve, available at any time. And also some of them were transferred to one or another structure, mainly to banks with state participation for further lending to the financial and real sectors.
On the accounts of the Central Bank of the Russian Federation, the Reserve Welfare Fund of Russia and the reserves of the Ministry of Finance are placed in three currencies: 20.98 billion US dollars, 29.9 billion euros and 40.3 billion pounds sterling. 
When converted into one monetary unit at the current rate, it turns out that their real value is $60.8 billion. And, accordingly, although $9.88 billion is listed on the balance sheet, it has actually already been spent for one purpose or another.
The main recipients of money from the National Welfare Fund of Russia and from the reserve fund of the Ministry of Finance are Vnesheconombank, foreign issuers, among which there are those that are not subject to rating requirements for long-term creditworthiness, that is, these are clearly not investments in first-class government loans of developed countries, as well as so-called self-sustaining national projects. In addition, assets are invested, according to the official report of the Ministry of Finance, in preferred shares of credit institutions.
Financing the budget deficit through emissions
A new milestone in the financial policy of the crisis period was emission financing of the budget deficit. Moreover, this is done using reserves. The National Welfare Fund of Russia is also involved in such operations.
The emission financing scheme looks like this today. The Reserve Fund sells currency to the Bank of Russia. As a result, the value of the total position of these two organizations does not change. But at the same time, the Central Bank of the Russian Federation issues the corresponding amount of money and issues it to the Ministry of Finance, crediting it to a single account of the federal budget to finance the deficit.
It is especially worth noting that currency conversion is carried out in such transactions outside the exchange, and remains hidden from market participants until the publication of reports, which are published with a delay of one month.
This scheme was first used, according to information from open sources, in February 2015. Then the National Welfare Fund of the Russian Federation sold 500 billion rubles worth of currency, which ended up being added to the budget and spent on current purposes.
The second time the operation was carried out in July - for 200 billion rubles. The third time, according to information from open sources, in August, for another 200 billion rubles. In total, since the beginning of the year, the volume of emission financing of federal budget expenditures has already amounted to 900 billion rubles.
The Russian budget deficit in 2015 is approximately 3 trillion rubles. According to some reports, it is planned to cover it all with the help of emissions. At the same time, official sources claim that the issue of such an amount will not cause additional pressure on the national currency exchange rate and will not lead to a surge in inflation.
Unfortunately, economic theory says otherwise. Moreover, the amount of artificial increase in the money supply will most likely not have a direct one-to-one impact on prices, but will become a kind of starting point for the inflation rate in the near future.
Russia's National Welfare Fund: how long will it last?
Not a single serious analyst today observes or declares signs of the country emerging from the crisis. If, of course, we do not take into account the official statements of government officials, we must understand that this is their job: to reassure the population and business representatives.
Today, official data indicate that the National Welfare Fund and the Ministry of Finance reserves are formally estimated at 70.69 billion, but in fact, $60.9 billion is available to further support the economy. About $20 billion is spent annually. It should be taken into account that costs may vary unevenly.
The main payments on external debts for the year are due at the end of 2015 and at the beginning of 2016. In the summer, the situation in this regard was less tense. Thus, we should expect an acceleration in the rate of spending of reserves.
In addition, the need for money depends not only on the real state of the economy, but also on a factor that is not always amenable to precise calculation: the level of trust in the authorities and financial authorities. As reserves are depleted, the pressure on financial markets will only increase, which means that more financial resources will be required to maintain relative stability.As a result, we can make the assumption that the country’s assets as a whole should be sufficient for the coming year. But this is only if two important parameters are kept constant. Firstly, the price of oil, and therefore the volume of replenishment of reserves, will remain at about $50 per barrel. Secondly, no attempts will be made to maintain the exchange rate of the national currency at one level or another. That is, the ruble will continue to fall freely.
At the same time, including thanks to emission financing of the budget deficit, inflation should also remain at a high level.
Subject to separate accounting and management in order to ensure co-financing of voluntary pension savings of citizens of the Russian Federation, as well as ensuring balance (covering the deficit) of the budget of the Pension Fund of the Russian Federation.
Formation of the fund
The National Welfare Fund is formed through:
- oil and gas revenues of the federal budget in an amount exceeding the volume of oil and gas transfers approved for the corresponding financial year, if the accumulated volume of the Reserve Fund reaches (exceeds) its standard value;
- income from managing funds of the National Welfare Fund.
Accommodation
On April 21, 2010, the Chairman of the Government of the Russian Federation V.V. Putin signed a decree of the Russian Government that until February 1, 2012 the Ministry of Finance will not be obliged to publish on the Internet information about the volumes of funds received into the accounts of the Reserve Fund and the National Welfare Fund, about where they are located and how they are used. Some economists believe that the refusal to publish this information is due to the rapid decline in the funds of both funds. Currently, the Ministry of Finance website contains information about the amount of funds in each of the funds.
Dynamics of changes
| date | In billion US dollars | In billion rubles |
|---|---|---|
| 01.02.2008 | 32,00 | 783,31 |
| 01.03.2008 | 32,22 | 777,03 |
| 01.04.2008 | 32,90 | 773,57 |
| 01.05.2008 | 32,72 | 773,82 |
| 01.06.2008 | 32,60 | 773,93 |
| 01.07.2008 | 32,85 | 770,56 |
| 01.08.2008 | 32,69 | 766,48 |
| 01.09.2008 | 31,92 | 784,51 |
| 01.10.2008 | 48,68 | 1 228,88 |
| 01.11.2008 | 62,82 | 1 667,48 |
| 01.12.2008 | 76,38 | 2 108,46 |
| 01.01.2009 | 87,97 | 2 584,49 |
| 01.02.2009 | 84,47 | 2 991,50 |
| 01.03.2009 | 83,86 | 2 995,51 |
| 01.04.2009 | 85,71 | 2 915,21 |
| 01.05.2009 | 86,30 | 2 869,44 |
| 01.06.2009 | 89,86 | 2 784,14 |
| 01.07.2009 | 89,93 | 2 813,94 |
| 01.08.2009 | 90,02 | 2 858,70 |
| 01.09.2009 | 90,69 | 2 863,08 |
| 01.10.2009 | 91,86 | 2 764,37 |
| 01.11.2009 | 93,38 | 2 712,56 |
| 01.12.2009 | 92,89 | 2 769,84 |
| 01.01.2010 | 91,56 | 2 769,02 |
| 01.02.2010 | 90,63 | 2 757,89 |
| 01.03.2010 | 89,63 | 2 684,21 |
| 01.04.2010 | 89,58 | 2 630,27 |
| 01.05.2010 | 88,83 | 2 601,62 |
| 01.06.2010 | 85,80 | 2 616,54 |
| 01.07.2010 | 85,47 | 2 666,41 |
| 01.08.2010 | 88,24 | 2 663,76 |
| 01.09.2010 | 87,12 | 2 671,54 |
| 01.10.2010 | 89,54 | 2 722,15 |
| 01.11.2010 | 90,08 | 2 772,80 |
| 01.12.2010 | 88,22 | 2 761,96 |
| 01.01.2011 | 88,44 | 2 695,52 |
| 01.02.2011 | 90,15 | 2 674,53 |
| 01.03.2011 | 90,94 | 2 631,98 |
| 01.04.2011 | 91,80 | 2 609,66 |
| 01.05.2011 | 94,34 | 2 594,58 |
| 01.06.2011 | 92,54 | 2 597,55 |
| 01.07.2011 | 92,61 | 2 600,00 |
| 01.08.2011 | 92,70 | 2 566,04 |
| 01.09.2011 | 92,63 | 2 673,05 |
| 01.10.2011 | 88,69 | 2 827,10 |
| 01.11.2011 | 91,19 | 2 726,42 |
| 01.12.2011 | 88,26 | 2 764,40 |
| 01.01.2012 | 86,79 | 2 794,43 |
| 01.02.2012 | 88,33 | 2 682,21 |
| 01.03.2012 | 89,84 | 2 600,88 |
| 01.04.2012 | 89,50 | 2 624,78 |
| 01.05.2012 | 89,21 | 2 619,52 |
| 01.06.2012 | 85,48 | 2 773,78 |
| 01.07.2012 | 85,64 | 2 810,45 |
| 01.08.2012 | 85,21 | 2 742,85 |
| 01.09.2012 | 85,85 | 2 772,45 |
| 01.10.2012 | 87,61 | 2 708,58 |
| 01.11.2012 | 87,19 | 2 748,67 |
| 01.12.2012 | 87,47 | 2 716,61 |
see also
- Budget Code of the Russian Federation
Notes
Links
- Dynamics of changes in the National Welfare Fund on the website of the Russian Ministry of Finance
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