The government “box” will be formed in a new way: what will happen to the NWF in 2023

The introduction by the collective West of marginal prices for Russian oil is forcing our government to take retaliatory measures. They consist not only in prohibiting the supply of energy carriers to states unfriendly to us. Care must be taken to reduce the budget deficit. There aren’t many options here. One of them was recently announced by the Minister of Finance of the Russian Federation Anton Siluanov.

The head of the Ministry of Finance said that if the price is below $70 per barrel, the government will not replenish the National Wealth Fund – the main government “savings”, all income from energy exports will go to the budget. And at a very low price of hydrocarbons, the authorities will increase borrowing on the market or use the funds of the NWF.

In general, the Cabinet adheres to such a policy that the recipients of federal money (citizens, institutions, businesses) do not feel any discomfort, price fluctuations and the impact of sanctions. Which, with the adoption of each next package, become simply “nuclear”.

Since December 5, a price ceiling of $60 per barrel has been introduced for Russian crude oil when it is delivered by sea. That already affects the income of exporters. The countries of Southeast Asia, where our supplies are redirected, require significant price discounts, they reach up to 32-35 dollars per barrel, a complete ruin for Russian oilmen.

But trouble, as you know, does not come alone. From February next year, the European embargo on the sea transportation of Russian oil products – gasoline, diesel fuel, fuel oil … There, too, “screws are being tightened” where it is possible and where it is impossible.

In general, “there are no more bright days” when the federal treasury was quietly replenished at the expense of petrodollars. Analysts believe that due to the sanctions of the collective West, the budget deficit in the coming year will increase by about 3 trillion rubles – in addition to the 2.9 trillion already included in the 2023 budget.

How does the state intend to fulfill its obligations to citizens, to implement social programs?

The scheme proposed by the Ministry of Finance is familiar to us to some extent. Under the old budget rule, all oil revenues below $40-43 per barrel used to go to the federal treasury. And everything that was higher went to replenish the National Welfare Fund. In the best of times, it was cherished like the apple of an eye, it contained about 13 trillion rubles, which, in the event of global cataclysms, could become a lifeline for the Russian economy. As of December 1, the Fund amounted to 11.4 trillion rubles – 8.5% of GDP. At the same time, during the year, money was slowly taken from it to cover the budget deficit. At the St. Petersburg International Economic Forum in June of this year, Anton Siluanov said that by the end of the year, spending from the Fund could amount to 3-4 trillion rubles.

Now, in fact, the Ministry of Finance offers the same “truncated version” of the formation of the NWF, only the bar has been raised higher, to $70 per barrel. However, this is not a budget rule; the updated version contains a completely different principle for distributing export earnings from trade in raw materials.

– How to understand the decision of the Ministry of Finance to replenish the government’s “pod”? – we ask the candidate of economic sciences, financial analyst Mikhail Belyaev.

“I think it’s more politically oriented,” he replies. – The Ministry of Finance took $70 per barrel, showing that for our country this is the lowest price at which we can work…

– By the way, do you mean oil of the North Sea brand Brent or Russian Urals?

– Of course, Urals. We trade it and we are talking about its price. Well, so, if, for example, they would cut off at 40 dollars, as was the case in the old budget rule, they would give a signal to the West that this level is acceptable for us. From an economic point of view, we don’t care how these oil revenues are distributed. From the budget and further to the national economy or through the NWF – in any case, they are spent for the same purposes. This division should not be taken as an innovation that can change the economy.

– What about the FNB? Should we cherish it like a sacred cow in case of future cataclysms, or, on the contrary, invest in the development of infrastructure and technologies?

– From the global crisis, if it takes place, it is not the formal money that is hidden in the “jet” that is protected, but a fully functioning economy. Money helps when a clear production mechanism is debugged. But in any well-established mechanism, “holes” happen, and then they are patched up pointwise with finances. And if the economy is weak and inefficient, cash savings will not solve the problem.

– So, the NWF should be spent?

– I’m not saying that it needs to be reset, reserves and stash will always come in handy. However, it is better to direct the funds to the development of the domestic economy, controlling their effective use. Then the economy will be resistant to external shocks and we will have that very “island of stability” that we spoke about relatively recently. And we will be able to afford to look at the global crisis from the outside.