The Reserve Fund may end this year or early next year, and funds from the national welfare Fund (NWF), the Russian authorities can begin spending in 2017.
“There’s a little left for next year, and, may be, and will spend (this year approx. ed.), if privatization does not happen in the planned volume. But most likely early next year”, – said the Agency interlocutor.
He also did not rule out that in 2017 will be spent funds from the national welfare Fund (NWF). “While the government has not abandoned,” he said.
Here’s how commented on the Reserve Fund managing partner Kirikov Group Daniil Kirikov:
“Theoretically, the depletion of the Reserve Fund in the current year is quite real. For the period from January to end of August its volume in ruble terms declined by 42%, i.e. almost in 2 times. During August, it was lost 470 billion (almost a quarter of the cash amount on September 1, 2016). Large-scale reduction of the Reserve Fund due to the excessive strengthening of the ruble (only for the first half of the year, it turned a loss of more than 400 billion), a high level of budget expenditures, reduction in tax base (over the last 2 years ceased its activities at approximately 1.5 million businesses) and deterioration of conditions for conducting business activity (growth of the average size bet on the loan from 11% to 17%, an increase of the order of the size of the property tax as a result of the move to the calculation of its size based on the cadastral value of the object, etc.). Also among the factors that contribute to the development of the situation in the negative trends are the ongoing 24-month drop in real incomes and the oil market situation (cost reduction of “black gold” since China completed the 1st stage of formation of the strategic petroleum reserve and growth in the number of drilling rigs in USA for 3.5 months).
The result of rapid exhaustion of the Reserve Fund can become the government to adopt unpopular decisions in Economics: it is quite possible refusal of indexation of salaries and social payments, indirect increase in taxes and fees, accelerating the pace of pension reform. It is likely also increased competition between groups for political and economic establishment for the possession of free or essentially contestable assets.
Partial privatization of state property would allow to neutralize the negative effects, however, the case of “Bashneft” indicates that, for political reasons, the government will not use this resource in full and with the necessary speed”.
