The Economy of Russia
Sovereign Funds and Fiscal Rules
Russia saved oil windfalls in stabilisation funds and set budget rules to prevent overspending when oil prices are high.
Saving for a rainy day helped Russia through crises.
Funds
Excess oil revenue was saved in funds that later formed the National Wealth Fund.
Rule
A rule based on a reference oil price limited spending.
Reserves
The central bank also built large foreign exchange reserves.
Limits
Sanctions froze a large part of these reserves held abroad in 2022.
Rainy day savings
When oil prices fell in 2014, reserves cushioned the shock.
Assuming reserves are always safe to use
Assets held abroad can be frozen.
Key takeaways
- Windfalls were saved.
- Fiscal rules limited spending.
- Reserves cushioned shocks.
- Sanctions froze foreign-held assets.
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