Russia to dip into own sovereign fund as it prepares for protracted oil price war

Russia is planning to tap into its sovereign wealth fund to help finance its economy as it prepares for a prolonged period of low oil prices. The country's finance minister, Anton Siluanov, announced on Tuesday that the government will use the National Wealth Fund (NWF) to support the economy and maintain social stability.

The NWF is a sovereign wealth fund that was established in 2008 to manage Russia's oil revenues. It currently holds around $160 billion in assets, which is equivalent to about 10% of Russia's GDP. The fund is designed to provide a financial cushion for the government in times of economic uncertainty.

Russia's decision to tap into the NWF comes as the country is facing a significant decline in oil prices. The price of Brent crude oil has fallen by around 30% since the start of the year, and many analysts are predicting that it could continue to decline in the coming months.

The Russian government has been trying to diversify its economy away from its dependence on oil exports, but the sector still accounts for around 60% of the country's budget revenues. The decline in oil prices has put a significant strain on the government's finances, and the decision to tap into the NWF is seen as a way to maintain social stability and support the economy.

The government has also announced a series of measures to help support the economy, including a cut in interest rates and a reduction in the budget deficit. The central bank has also intervened in the foreign exchange market to support the ruble, which has been under pressure due to the decline in oil prices.

Overall, Russia's decision to tap into its sovereign wealth fund is seen as a way to maintain social stability and support the economy during a period of economic uncertainty. However, it also highlights the challenges that the country faces in diversifying its economy and reducing its dependence on oil exports.