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The Russian government earlier this month raised
the cap on spending cash from the National Wealth Fund, one of
two funds that collect revenue from sales of oil and gas, the
country's biggest exports.
It now allows 60 percent of the fund to be spent on domestic
infrastructure projects, up from an earlier 40 percent.
The fund, designated to cover the future pension deficit of the
country’s rapidly ageing population, was $87 billion at the
beginning of the month.
“In my opinion, it is possible and even necessary to invest 100
percent of the National Wealth Fund in infrastructure projects,”
Ulyukayev was quoted as saying. “If we can invest the fund’s
money in a way that is profitable and reliable – then we are not
spending it, but we are investing it, multiplying (the fund).”
The Russian Finance Ministry had long opposed greater spending
of the fund’s money on domestic projects and economists warn
that in a country with such a high level of corruption the cash
can be lost.
One of the projects that the fund is will invest in is a massive
railway link. The head of Russian Railways, Vladimir Yakunin,
said on Tuesday that it was right to invest the cash in the
projects, but the construction of the railways link will not
make commercial returns..
Separately, Ulyukayev said that there were greater risks to
Russia’s economic growth than to inflation.
Gross domestic product growth is expected to come in at near
zero at the end of this quarter, dragged down by falling
investment.
Annual consumer price inflation stood at 7.6 percent in May,
significantly above the central bank’s target of 5 percent.
“The risk to economic growth is significantly greater, acute and
with more dangerous consequences,” Ulyukayev said.
He reiterated, however, that GDP may grow by more than the
ministry’s official estimate of 0.5 percent this year.
(Writing by Lidia Kelly; Editing by Erica Billingham)
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