Russia dips into Reserve Fund for another massive bailout

Prime Minister Dmitry Medvedev has ordered the allocation of 500 billion rubles ($7.6 billion) from Russia’s Reserve Fund to the federal budget. Medvedev made the announcement today at a government meeting on the country’s socioeconomic development.

On February 1, Russia’s Reserve Fund contained 5 trillion, 864.9 billion rubles ($88.9 billion).

Speaking at the meeting, Medvedev said recent economic conditions have changed dramatically. “There’s been a significant decline in world prices on Russia’s main exports, access to foreign borrowing remains very limited, and some financial markets are simply closed to us. This was inevitably going to affect our economic growth rate and consumer demand,” Medvedev explained. 

“To replace lost revenue and honor budgetary commitments, we will use up to 500 billion rubles of the Reserve Fund,” said Medvedev. “I signed a government order to this effect yesterday.”

According to the Finance Ministry’s website, the Reserve Fund is designed to help the state fulfill its spending obligations in the event that revenues from oil and gas decline.

Even before Medvedev’s announcement, Russia had already announced other plans to use part of the Reserve Fund to finance anti-crisis spending measures, approved by the government in late January. The total expenditures of this earlier plan are estimated to be 2.3 trillion rubles ($34.9 billion), roughly half of which was allocated to shoring up the 2014 federal budget.