Russia's Reserves: How Long Will They Last?

Russia's finance minister sought Wednesday to reassure investors and citizens that the economy will survive the global financial turmoil, saying Russia's rainy day fund will last for at least 7 years under the worst-case scenario.

Despite a plunge in stock markets, oil revenues and the ruble, Alexei Kudrin said Russia's vast reserves — which have been accumulated in the 8-year-long oil boom — "have laid a solid foundation for a stable macroeconomy and the rate of the national currency."

Russian may tap the Reserve Fund for up to 500 billion rubles ($18 billion) next year to make up for declining budget revenues, Kudrin said.

If Russia's 3.5 trillion ruble ($127 billion) rainy day fund "won't be replenishing and Russia will be spending 500 billion rubles from it annually, it will last for at least 7 years." The fund may last up to 20 years, he added, but this will depend on the pace of economic growth.

National development bank VEB has already received 90 billion rubles ($3.3 billion) to support the plunging stock market and will get $3.2 billion in the next few months, Kudrin told the parliament.

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The Central Bank's chairman Sergei Ignatyev told lawmakers that it had spent $57.5 billion from its foreign currency reserves in September and October to back the declining ruble during the financial crisis.

In addition to fluctuations in currency exchange rates, this has caused Russia's international reserves to fall by $97.6 billion during the period, Ignatyev told the lower chamber of the Russian parliament.

Pressed by plunging oil prices the Russian Central Bank last week loosened its "managed float" policy as it widened the ruble's trading corridor by 0.30 ruble, a move that fueled fears that the ruble is in for a big drop.

Russia's presidential aide Arkady Dvorkovich on Wednesday said again that the government would not let the national currency tumble.

"The Central Bank is in full control of the situation," Dvorkovich said in televised remarks. He admitted that lower oil prices may affect the ruble, but pledged that "there will be no devaluation".


hmmmm. Didn't an infamous President of a certain republic once say he'd defend his currency like a dog? Only to be yipped and barked at for yars afterwards when it uberdevalued anyways? Where do you find the stats for the Russian foreign currency accounts? I wonder how much they have for defending the ruble. $57G is a frak load of dinero. Anyways, Putin might want to wait before he does his Kremlin Comeback.