OREANDA-NEWS. November 5, 2008. In order to optimize the management of funds of the National Wealth Fund, Russian Government Resolution dated October 15, 2008 N 766 introduced changes in the procedure for managing funds of the National Wealth Fund. These changes provide for the funds to be placed in deposits and balances in bank accounts with Russian banks, lending institutions and State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ as well as in debt instruments and shares of legal entities and equity stakes (equity participation stakes) of investment funds.

Pursuant to Resolution N 766, funds of the National Wealth Fund may be deposited with Vnesheconombank in the amount 625 billion rubles. In this case, up to 450 billion rubles may be deposited for a period up to December 31, 2019 with quarterly interest payments at a rate of 7% per annum and a deposit refund option as agreed with Vnesheconombank.

Furthermore, 175 billion rubles may be deposited with Vnesheconombank and in this case dates and other material deposit terms and conditions are to be determined by the Russian Finance Ministry. At present, the Russian finance ministry has set the following deposit terms and conditions: deposit term is up to 2013; an interest rate is fixed and is 7% per annum. By using funds transferred to its deposit, Vnesheconombank is to purchase Russian issuers’ shares and corporate bonds. Once Vnesheconombank has formed an investment portfolio from the said financial assets, a fixed deposit rate is expected to be replaced with a floating deposit rate, with interest income to be paid depending on the yield of indexes comprised of securities included in the abovementioned portfolio.

Pursuant to Resolution N 766, the Russian Federal Treasury and Vnesheconombank entered into agreements on depositing funds of the National Wealth Fund. Under the said agreements, as of November 1, 2008, 170 billion rubles were transferred from the account to record funds of the National Wealth Fund in order to be deposited with Vnesheconombank and out of this amount:

    125.00 billion rubles were deposited for a period up to December 31, 2019, with an interest rate of 7% per annum;

    45.00 billion rubles were deposited for a period up to November 21, 2013, with an interest rate of 7% per annum.

Under Russian Government Resolution dated December 17, 2007, N 892 “ On Making Settlements and Transferring Funds to Form and Use Oil and Gas Revenues of Federal Budget, Oil and Gas Transfer, Funds of the Reserve Fund and the National Wealth Fund”, in October 2008, oil and gas revenues of the federal budget for September 2008 in the amount of 435.77 billion rubles were channeled to form the National Wealth Fund in full.

Under Russian Government Resolution dated January 19, 2008, N 18 “On the Procedure for Managing Funds of the National Welfare Fund”, in October, 2008, a part of oil and gas revenues of the federal budget for August 2008 in the amount of 220.00 billion rubles was converted into foreign currency. All conversion transactions in funds of the National Wealth Fund were conducted in conformity with the currency structure approved earlier and didn’t have any impact on the conditions of the foreign exchange market

As of November 1, 2008 the aggregate amount of the National Wealth Fund was 1 6667.48 billion rubles, which is equivalent to 62.82 billion US dollars. As of November 1, 2008 amounts of balances were:

1)      in separate accounts to record funds of the National Wealth Fund with the Bank of Russia:
358.12 billion rubles;
20.41 billion US dollars;
14.07 billion euros
2.38 billion pounds sterling;

2)      on deposits with Vnesheconombank:
170.00 billion rubles.

The aggregate calculated income from placing funds of the National Wealth Fund recalculated in dollars for a period from January 2008 to October 31 amounted to 1.09 billion dollars, which equivalent to 28.81 billion rubles. Calculated amounts of interest income from placing funds of the National Wealth Fund into separate accounts in foreign currency were (in currency of account and ruble equivalent): 0.35 billion US dollars (9.31 billion rubles); 0.43 billion euros (15.24 billion rubles); 0.10 billion pounds sterling  (4.26 billion rubles). The exchange rate difference from recalculating balances of accounts to record funds of the National Wealth Fund in foreign currency for a period from January 30, 2008 to October 31, 2008 was a positive value of 9.33 billion rubles.

As of November 1, 2008 the aggregate amount of the Reserve Fund was 3 572.78 billion rubles which is equivalent to 134.60 billion US dollars.  As of November 1, 2008, amounts of balances in separate accounts to record funds of the Reserve Fund were:
64.64 billion US dollars;
43.81 billion euros;
7.31 pounds sterling

The aggregate calculated income from placing funds of the National Reserve Fund recalculated in dollars for a period from January 31, 2008 to October 31, 2008 was 4.16 billion US dollars, which is equivalent to 110.36 billion rubles. Calculated amounts of interest income from placing funds of the Reserve Fund into separate accounts in foreign exchange were (in currency of account and ruble equivalent): 1.45 billion US dollars, (38.50 billion rubles); 1.59 billion euros (55.65 billion rubles); 0.37 billion pounds sterling (16.22 billion rubles). The exchange rate difference from recalculating balances of accounts to record funds of the Reserve Fund in foreign currency for a period from January 30, 2008, to October 31, 2008 was a positive value of 54.55 billion rubles.

Indicators of the aggregate amount of the Reserve Fund and the National Wealth Fund as well as of calculated incomes from placing funds of the Reserve Fund and the national Wealth Fund were calculated on the basis of official exchange rates of foreign currencies set by the Bank of Russia as of the date prior to the reporting date and of cross rates calculated on the basis of the said exchange rates.

Detailed statistics on transactions in funds of the Reserve Fund and the National Wealth Fund is posted on the Internet site of the Russian Finance Ministry in the following sections; “Reserve Fund” and “National Wealth Fund” in appropriate subsections in Russian and English, the statistics is updated on a regular basis.