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Russian Finance Ministry to use Welfare Fund to support Rosatom projects

January 19, 2014, 0:13 UTC+3 PETROPAVLOVSK KAMCHATSKY
Siluanov did not specify the projects, but said that “these are very beneficial projects in terms of keeping our enterprises working and creating high-skilled jobs
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PETROPAVLOVSK KAMCHATSKY, January 18, 23:47 /ITAR-TASS/. Russian Finance Minister Anton Siluanov said his ministry was prepared to use the National Welfare Fund’s resources to support Rosatom nuclear energy corporation’s industrial projects.

“We have agreed that Rosatom projects, too, may be implemented with the support of the National Welfare Fund,” he said on Sergei Brilev’s Vesti v Subbotu (News on Saturday) television programme on January 18.

Siluanov did not specify the projects, but said that “these are very beneficial projects in terms of keeping our enterprises working and creating high-skilled jobs. But most importantly, we will get [enterprises] busy for decades ahead.”

Deputy Minister of Economic Development Nikolai Podguzov said earlier this week that Russia might start one or two investment projects in 2014 using the money from the National Welfare Fund.

“I think it would be good if we start implementing one or two projects in 2014,” he said.

More than 40 percent of the National Welfare Fund’s assets will go into investment projects, First Deputy Prime Minister Igor Shuvalov said.

“The decision has been made to leave the 40-percent limit unchanged. Some had proposed to raise it to 50-60 percent. However the president made the decision that the previously declared 40 percent was the limit for the government to observe,” he said.

Shuvalov said that the 40 percent included 670 billion roubles from the Welfare Fund’s assets placed in Vnesheconombank and the funding to be earmarked for the modernisation of the Trans-Siberian and Baikal-Amur Railways and the construction of the Central Ring Road outside Moscow. This leaves 150 billion roubles that were earlier intended to be used for building the high-speed railway from Moscow to Kazan, Tatarstan, in the Volga region. “This project was discussed. It will not be dropped and instructions were issued to prepare a feasibility study for this project to see how much it will cost and how soon the investment can return. Only after that will we consider the possibility of financing the project,” Shuvalov said.

“The Fund’s regulations allow it to invest up to 40 percent of its assets,” Putin said.

He believes that the nine billion U.S. dollars attracted by the Russian Direct Investment Fund into joint investment projects could provide strong support for the National Welfare Fund’s financial commitments.

President Vladimir Putin said that the government had made the decision to invest the Welfare Fund’s assets in transport projects such as the modernisation of the Trans-Siberian and Baikal-Amur Railways, and the construction of the Central Ring Road outside Moscow.

“I know that the Russian Direct Investment Fund has prepared an impressive portfolio of infrastructure projects that have evoked interest among private companies, including foreign ones, which are prepared to act as co-investors,” the president said. “The Fund has already attracted about nine billion U.S. dollars’ worth of foreign capital into joint investment projects. I believe this money can provide strong support for the Welfare Fund’s financial commitments.”

The president believes that long-term resources and the sharing of risks with private investors will ensure good returns on investment in Russian infrastructure.

At the same time, Putin stressed the need to remember other projects such as the development of Moscow’s aviation hub, Siberia and the Russian Far East.

The Russian government has also allowed the Finance Ministry to invest no more than 10 percent of assets from the National Welfare Fund in high-risk bonds.

The government will make separate decisions in each instance. But its resolution “allows the Finance Ministry to invest a limited portion of National Welfare Fund’s assets (no more than 10 percent) in the debt obligations of foreign states with a higher rate of return (risk) than sovereign debt obligations that make up the biggest part of the Fund’s investment portfolio,” Siluanov said.

Russia’s gold and currency reserves stand at about 520 billion U.S. dollars, and the National Welfare Fund amassed three trillion roubles (100 billion U.S. dollars) in 2013, growing by 7.8 percent.

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