RUSSIAN RESERVE FUND MANAGEMENT: PROBLEMS AND PROSPECTS

Abstract

The international experience on the use of state reserve funds for economic development approves that the infrastructure facilities deficit affects the development of non-energy sectors and holds the economic growth, in spite of the improving investment climate in the country. The effective bankroll investment of Russian Reserve Funds (the Reserve Fund and National Welfare Fund) is the integral part of the active state investment policy which facilitates lifting of the infrastructure restrictions. Generally, the countries establish reserve funds when their budget is highly dependent on market factors and global commodity prices. These funds have two functions. Firstly, the resources could be used to cover the budget deficit at the time of adverse conditions. Secondly, funds allow to accumulate extra export revenues and to prevent the Dutch disease when commodity prices increase. The state reserve fund is a special monetary fund which is used to stabilize the budget during budget revenues decreasing and for state long term purposes. Apart from resolving economic problems, the reserve fund have a political mission to prevent government expenditures growth. Traditionally, it is impossible to reduce quickly government expenditures after the drop in budget income. As a result, this situation entails large budget deficit, nonfulfillment of social obligations and the government debt default in terms of adverse market conditions. It is essential to improve the investment efficiency of the fund’s resources for the Russian Reserve Funds (NWF and the Reserve Fund) best practice. The article is devoted to the issue of Russian reserve funds management.