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After Moscow started what it calls a “special military operation” in Ukraine on Feb. 24, the finance ministry has said that the NWF, initially designed to prop up the pension system, will become the main source of financing for a budget deficit this year.
The government decree dated July 14 but published the day after said the maximum share of Russian state bonds in the NWF can reach 50%. Russia had not invested NWF money, a rainy-day cushion containing oil revenues, in OFZ bonds in the past.
The move comes after the share of foreign investors among holders of the rouble-denominated OFZ treasury bonds declined, leaving Russian state banks the main bondholders.
Russia has said it was unlikely to borrow this year on the domestic market via OFZs, which it uses to plug budget holes, after Moscow took a hit from sweeping sanctions for its move to send tens of thousands of troops into Ukraine.
This year, Russian authorities have extensive plans to use NWF money, also planning to channel it towards supporting the value of stocks and government bonds that have shrunk sharply since late February.
The value of Russia’s national wealth fund, which accumulates profits from the country’s oil revenues, stood at $210.6 billion as of July 1, up from $197.7 billion a month earlier.
