Russia’s Wealth Fund Drops Almost $6 Billion Month Over Month — At This Rate Of Cash Burn, Russia's Wealth Fund Is Zero -- Charles Kennedy — June 4, 2025

Locator: 48682RUSSIA.

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Russia’s National Wealth Fund, a rainy-day reserves fund, saw its liquid assets drop by the equivalent of nearly $6 billion in May, data from the Russian finance ministry showed on Wednesday. The National Wealth Fund had its readily available liquid assets drop by $5.75 billion (453.8 billion Russian rubles) in May, and the total value dropped to $35.5 billion (2.8 trillion rubles). The National Wealth Fund’s liquid assets have plunged by 68% since the start of the Russian invasion of Ukraine in February 2022, Bloomberg has estimated.

At this rate of cash burn, the NWF will be depleted by the end of this year (2025).

Everything suggests Putin is betting the entire country on his obsession with Ukraine. One truly has to ask whether he is sane by the usual hallmarks of sanity.

National Wealth Fund (NWF) Vs Russia's foreign exchange reserves:

In Russia, the National Wealth Fund (NWF) and foreign exchange reserves serve different but complementary economic purposes. Here’s a breakdown of the key differences:

1. Purpose

• National Wealth Fund (NWF): 
• Designed as a sovereign wealth fund to support long-term fiscal stability, fund budget deficits, and support pensions. 
• It’s essentially a savings fund from oil and gas revenues. 
• Foreign Reserves (Central Bank reserves): 
• Managed by the Central Bank of Russia, these are held to stabilize the ruble, manage balance of payments, and back up monetary policy. 
• Think of it as Russia’s rainy-day fund for defending the currency and managing external debt.

2. Management

• NWF: 
• Managed by the Russian Ministry of Finance.
• Foreign Reserves: 
• Managed by the Central Bank of Russia independently from the government.

3. Composition

• NWF: 
• Composed mainly of oil and gas revenues, and investments (in foreign currencies, gold, and sometimes domestic projects). 
• After 2022 sanctions, it’s increasingly held in Chinese yuan, gold, and ruble assets. 
• Foreign Reserves: 
• Includes a broader basket of assets: 
• Foreign currencies (USD, EUR, yuan, etc.) 
• Gold 
• Special Drawing Rights (SDRs) 
• MF reserve positions
• Highly liquid foreign government bonds 

4. Liquidity and Use

• NWF: 
• Can be tapped by the government to cover budget deficits. 
• Can invest in domestic projects (e.g., infrastructure, state companies). 
• More political discretion in its use. 
• Foreign Reserves
• Used for currency interventions to stabilize the ruble.
• Supports monetary and financial stability. • Not usually used directly for government spending. 

5. Size (as of mid-2024 estimates) 

• NWF: Around $148 billion (equivalent), though a portion is illiquid. 
• Foreign Reserves: Around $580 billion, though about half were frozen by Western sanctions after Russia invaded Ukraine in 2022.

NWF: note mid-2024 estimate and May, 2025, estimate.

    mid-2024: $148 billion
    May, 2025: $35.5 billion (76% of it value one year earlier)