Kremlin Goes Bankrupt

The money from the National Welfare Fund has been spent.

The funds of the National Welfare Fund of the Russian Federation, which was actively spent on patching budget ‘holes’ after the beginning of the war, will be enough only for six months to finance state expenditures in case of a serious drop in oil prices.

Zadornov, former Minister of Finance of the Russian Federation and former Chairman of the Management Board of FC Otkrytie Bank, has given such an assessment.

He points out that as of 1 February, the volume of the fund's liquid assets (currency and gold on the Central Bank's accounts) had fallen to Br3.8 trillion, or less than 2% of GDP.

It was 7.4 per cent of GDP before the war.

The money from the fund, which the government had been saving for years due to oil and gas budget surpluses, was used to finance the defence order and large-scale budget spending, which gave the economy a stimulus of 10% of GDP over three years, or 20 trillion rubles, according to Zadornov.

However, as a result, the government has almost no reserves ‘for a rainy day,’ while spending on the army and war continues to grow: in 2025, it will amount to 13.2 trillion rubles: 22% more than a year earlier, double the figure for 2023, and almost four times more than in pre-war 2021 (3.5 trillion rubles).

‘The government will be able to balance the budget only when hostilities end,’ Zadornov emphasises.

And reducing the budget deficit is ‘a key factor in defeating inflation,’ which is ‘increasingly felt by the Russian population and businesses,’ he adds.

According to the Ministry of Finance, before the start of the war, the NWF had $113.5bn of liquid assets, and by the beginning of 2025 only $37.5bn remained - the minimum since the fund was created in 2008.

In three years of fighting, the government has spent two-thirds of the fund's money, or $76 billion, spending 6.5 trillion rubles to cover the budget deficit and pouring hundreds of billions of rubles into state corporations that needed rescue from sanctions and money for the Kremlin's megaprojects.

‘Forbidden Opinion’ Telegram Channel

You can support the website Charter97.org

MULTI-CURRENCY ACCOUNT FOR ASSISTANCE:

Bank's name: Bank Millennium S.A.
Address: ul. Stanislawa Zaryna, 2A, 02-593, Warszawa
IBAN: PL97116022020000000216711123
SWIFT: BIGBPLPW
Name of the account holder: Fundacja “KARTA ‘97”
Purpose/title of payment: Donation for statuary aims

You can contact us by the e-mail [email protected]