OREANDA-NEWS. April 23, 2009. Russia is to spend virtually all resources from the Reserve Fund in 2010, vice PM and finance minister Alexey Kudrin said, announcing a RUB 20 bn reduction in state cash injections into VTB’s capital. “We anticipate that the Reserve Fund will be fully spent in 2010 and it will meet the target of saving the federal budget,” the minister said.

Kudrin also did not rule out tapping into the National Welfare Fund (NWF), adding “currently there are no plans to use NWF resources, but we do not rule out that some funds could be taken to support the pension system”. The finance minister also said that the government will funnel into VTB’s capital not RUB 200 bn, as projected earlier, but RUB 180 bn, since Duma members decided to allocate RUB 20 bn to the capital of the Agency for Housing Mortgage Lending to sustain the system for refinancing mortgage loans.

The state will continue to provide support to lending institutions. “The banking system should be rock solid. We do not want to see a repeat performance of the 1998 financial meltdown when many banks went out of business. Therefore, the government has steered a course aimed at injecting additional funds into certain banks,” Kudrin said. “We calculated the amounts required to support the banking system taking into account the forecast for NPL growth rate of 10% and if NPLs exceed this threshold, we’ll have to revise the federal budget and seek additional financial resources”.