After the National Welfare Fund (NWF) reaches 7% of GDP in 2019, it will be possible to consider the possibility of capitalizing VEB from it, First Deputy Prime Minister and Finance Minister Anton Siluanov said (quoted by Interfax).
The pre-capitalization of VEB, about the need for which its new chairman Igor Shuvalov announced immediately after the appointment, is discussed in the government for several months. In the next five years, VEB was hoping to get 1 trillion rubles., Bloomberg reported, citing sources. But since then the amount has decreased more than threefold. "Igor Ivanovich Shuvalov said that this is 300 billion rubles. for a few years, "said Siluanov. - <...> We are in favor of VEB being an active development institution, this requires capital. " How to pre-capitalize VEB, is still being discussed, another official notes. Earlier, Shuvalov spoke about the possible capitalization of the bank at the expense of the development fund created in the budget. Perhaps it will be cheap funding through a combination of funding mechanisms from the market and subsidizing interest rates, the official says, as well as the placement of free Treasury funds, SWF and CB deposits. The representative of the Ministry of Finance declined to comment. VEB actively interacts with the Ministry of Finance in connection with capitalization, the representative of the bank is laconic.
Since 2018, the government has cut VEB's support from 150 billion to 100 billion rubles. a year, however, in return, the Ministry of Finance promised to place a deposit in VEB for 200 billion rubles. All funds from the state immediately go to reserves and nothing remains for the development of the bank, says expert "Expert RA" Stanislav Volkov: in order to fully restart VEB, 300 billion rubles. enough. It may well be that 300 billion rubles. there will not be enough and will have to provide additional support, argues Fitch Ratings analyst Alexander Danilov. In 2017, VEB's net loss increased to a record 287.7 billion rubles, 250 billion of which fell on additional reserves for problem loans. In the first half of 2018, VEB recorded a loss of 75.6 billion rubles. Compared to the same period in 2018, it grew 1.6 times, according to the bank's report.
After not part of the NWF projects will reach 7% of GDP, money can again begin to invest in new projects. Since the beginning of the year, the NWF rose by 1.5 trillion rubles, by September it was 5.2 trillion, or 5.3% of GDP. In the second half of 2018, the growth of the NWF will slow down, analysts of the Central Bank write in the review "What the Trends Say" (conclusions may not coincide with the official position of the regulator), proceeds from foreign exchange interventions may continue to grow by about 1 percentage point of GDP for the quarter, but the remaining liquid part will be partially spent on financing costs.
So far, the Ministry of Finance has not made public its proposals on what to do with reserves after the liquid part of the NWF exceeds 7% of GDP. Siluanov only noted that Russia should turn into the second Norway, whose economy got rid of dependence on fluctuations in oil prices. VEB's pre-capitalization will violate the budget rule, the official believes: money will go to the economy, it is more correct to invest in foreign assets.
Norway is the only country in the world with such a tight budget rule, when only the investment income of the fund is spent, says the head of the Economic Expert Group Eusebius Gurvich. The problem is not in the choice - to invest in the country or in foreign assets, but in the effectiveness of such costs, he continues. The budgetary rule is not violated, VEB's capitalization can be perceived as an investment in infrastructure projects, Gurvich believes, but the question is whether such costs are worthwhile. The pre-capitalization of VEB due to the NWF contradicts the essence of the rule and will be a dangerous precedent, argues Alfa-Bank's chief economist Natalia Orlova, and the motivation is also unclear - why link VEB's capitalization with the size of the reserves. We need to choose what is more important - the independence of the budget from oil or a change in the structure of the economy, says Vladimir Tikhomirov, chief economist at BCS Global Markets, it is unlikely that such reserve spending will disperse inflation or violate financial stability.