Deputy Prime Minister and Finance Mister Alexei Kudrin addressed the State Duma during the Government Hour


He said that the volume of Russia’s gold and currency reserves provides a reliable foundation for the country’s macroeconomic stability. Therefore, “one-time shocks can be overcome,” Mr Kudrin said.

He said that the volume of Russia's gold and currency reserves provides a reliable foundation for the country's macroeconomic stability. Therefore, "one-time shocks can be overcome," Mr Kudrin said.  

According to the Finance Ministry, the present volume of the Reserve Fund is 3.588 trillion roubles or $131.24 billion; the volume of the National Welfare Fund is 1.672 trillion roubles or $61.6 billion.

Mr Kudrin said that the scheme for investing the former Stabilisation Fund resources was aimed at preventing the rouble's excessive appreciation, which negatively affects the economy. "When the national currency is appreciating too quickly, it results in the "Dutch disease," Mr Kudrin said.  

He believes that "the task of correctly investing the Stabilisation Fund resources has been successfully accomplished." "During the period between 2004 and 2007, when the Stabilisation Fund's resources were being invested, 203 billion roubles were earned," the Deputy Prime Minister said. "Also it should be taken into account that the rouble's appreciation against the dollar depleted 51 billion of the amount. Therefore, the net profit from placing the funds was 152 billion roubles."  

During that period, the Stabilisation Fund was constantly growing, Mr Kudrin said. The average aggregate placement profitability amounted to 10.7% in USD. "This is one of the most efficient methods of sovereign funds placement," stressed Mr Kudrin. He said "the Fund was never idle, but was working for Russia at the time when the price of oil was going down." Mr Kudrin compared the Stabilisation Fund with a large export-oriented company, which brings in hard currency revenue. The currency, according to Mr Kudrin, will be directed toward protecting and increasing the rouble's convertibility. 

The Deputy Prime Minister also said that the Government would be transferring 175 billion roubles to Vnesheconombank (VEB) to support the stock market. A portion of the funds, 90 billion roubles, has already been provided to the bank, and the funds are currently being placed in the market. The rest of the funds, according to Mr Kudrin, will be transferred to VEB in the upcoming months.

Mr Kudrin also supported Central Bank's measures to widen the currency corridor and sustain the rouble's stability. "Central Bank is implementing a gradual widening of the exchange rate variation corridor, which is reasonable and enables to maintain a stable exchange rate; it will preclude the Government from expending the currency reserves too quickly.

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