Translated material
Japanese ruble
Russia is looking for new sources of placing financial reserves
Instability in global financial markets and the depreciation of the dollar against other major currencies are forcing the Russian government to consider the possibility of adjusting the structure of the allocation of the country's financial reserves . Yesterday, Deputy Prime Minister and Finance Minister Alexei Kudrin said that the funds of the national welfare fund, created as a result of the division of the stabilization fund, can also be invested in the Japanese yen. “We are considering the issue of adding the yen, experts are now studying the feasibility of this step,” the minister said in an interview with the Japanese newspaper Nikkei, published on the eve of the next meeting of the financial G-7, which opens on February 9 in Tokyo.The head of the Russian Ministry of Finance will take part in an extended meeting with the participation of the heads of financial departments and central banks of Great Britain, Germany, Italy, Canada, the USA, France and Japan. The main topic of the meeting, naturally, will be measures to overcome the global financial turmoil caused by the crisis in the US mortgage lending system.
Currently, the currency structure of the National Welfare Fund is 783 billion rubles. ($32 billion) are dollar, euro and pound sterling in the ratio 45:45:10. The reserve fund has a similar structure, which, along with the national welfare fund, appeared last week as a result of the division of the stabilization fund. Moreover, there is much more money in the reserve fund - 3 trillion 069 billion rubles. ($125.4 billion).
In fact, it is this reserve fund that is intended to play the role of a stabilization fund . In other words, it will be the financial “airbag” that should save the country in the event of a sharp decline in oil prices and a budget deficit.
Therefore, spending funds from the reserve fund before the time “H” is prohibited by law. The same cannot be said about the national welfare fund. For him, apparently, the hour “X” will come soon enough. The fact is that its funds are allowed to be used to co-finance the pension savings of Russians and eliminate the deficit of the Russian Pension Fund (PFR). Considering the current unenviable financial state of the Pension Fund, it is not difficult to guess that part of the funds of the former stabilization fund may end up in the hands of pensioners in the foreseeable future. Although it’s unlikely until the fall. The fact is that the procedure for using the funds of the national welfare fund has not yet been developed. The Ministry of Finance must close this regulatory gap by October 1.
The national welfare fund differs from the reserve fund in one more fundamental criterion. Its funds (remaining after providing support to the pension system) are allowed to be invested in foreign corporate securities, including shares. That is, invest in riskier, but also more profitable financial instruments. It is no coincidence that Alexey Kudrin, in an interview with the same Nikkei newspaper, did not exclude the possibility that shares of Japanese companies could be purchased with funds from the national wealth fund.
As Deputy Director of the Department of International Financial Relations, Public Debt and State Financial Assets of the Ministry of Finance Pyotr Kazakevich said last week, the placement of the fund’s money will be handled by special management companies, and it is possible that foreign ones as well. At the same time, as the official explained, a situation in which this money could be used to gain control over some foreign assets is excluded. Using the funds of the national wealth fund, small blocks of shares of a larger number of issuers will be purchased, so that if problems arise for any of them, they will not be left with nothing. As follows from Mr. Kudrin's interview with a Japanese newspaper, the share of the fund's funds in shares of foreign companies will not exceed 5%.
“In my opinion, it would be correct if some restrictions on the minimum balance of the fund were defined at the legislative level, this would allow it to be invested more efficiently, using instruments with a higher risk,” says Mr. Kazakevich.
However, apparently, the profitability of the reserve fund will also increase. The fact is that the government has expanded the range of securities in which its funds can be placed. If money from the stabilization fund could only be invested in bonds of states with the highest long-term credit rating (AAA) from the three leading rating agencies (Fitch, Standard & Poor's, Moody's), now the requirements have been reduced by one level (to AA-).
According to Mr. Kazakevich, for the previous annual reporting period ending December 15, 2007, the Ministry of Finance earned 151.89 billion rubles, or $6.2 billion, from the placement of stabilization fund funds. Over the last month and a half of the existence of the stabilization fund - from December 15 2007 to January 30, 2008 - earned 1.17 billion dollars (28.63 billion rubles).