Can you think of a country more reliant on their sovereign wealth right now than Russia? I can’t.
In September, the Russian government spent over $10 billion directly out of its SWF to fill budget gaps. Moreover, the government expects to completely exhaust the SWF by the end of 2010; this is remarkable since the fund is currently valued above $70 billion. Once the SWF is gone, what will the country do?
Apparently, it will sell its gold reserves. The country has roughly $19 billion in gold reserves thanks to current elevated prices. These may be called on to fill budget gaps beyond 2010.
By spending down in this manner, the government seems to be making a big bet that the global economy will be back on its feet by 2011 and government coffers will start filling up again. If not, there will be some tough choices to make.
… though the the National Wealth Fund increased its assets by $60 billion in the past 12 months which appears to outbalance the drawing down of the National Reserve Fund by more or less the same amount ….
Ah, good point.