Accumulating currencies for long periods today is economically reckless
After 24 February 2022 years of operation of the National Welfare Fund (FNB) were terminated. This was the official statement from the government..
remind, that the FNB was created in 2008 year on the basis of the previously existing Stabilization Fund. Initially, the NWF was conceived as a reserve fund to strengthen the provision of pensions in the country for the long term.. AT 2018 year there was some reorganization of the FNB. The remains of the Reserve Fund that had been in operation until that time were attached to the NWF, and the Reserve Fund itself was liquidated. From now on, the NWF was entrusted with the task of not only maintaining and strengthening the budget of the Pension Fund, but also to ensure a balance (deficit coverage) federal budget. Additional oil and gas revenues are identified as the source of the formation of the NWF (taxes and duties), t. it is. they, which exceed the basic oil and gas revenues, forming the federal budget. The division of oil and gas revenues into basic and additional was determined using the so-called budget rule. Specifically with 2017 years, the basic income began to include those, which are calculated based on the price per barrel of Urals oil in the amount of 40 US dollars in 2017 year. This is the base price, subject to annual indexation from 2018 year 2 percent. In the past year, eg, basic oil and gas revenues, received by the federal budget, exceeded 3 RUB trillion. FNB grew by leaps and bounds. If in 2008 year, its volume was 1 trillion rubles, then by the end of last year it had grown to 13,6 RUB trillion.
An important feature of the FNB is that, that it is formed mainly at the expense of foreign currencies (ruble component is, but very little). The FNB is under the jurisdiction of the Ministry of Finance of the Russian Federation. Therefore, the NWF is often called the "currency wallet" or "currency piggy bank" of the financial department.. And since the Ministry of Finance itself does not enter the foreign exchange market, then the operations for buying and selling the currency of the National Welfare Fund and the current management of the currency part of the fund are carried out by the Central Bank of Russia.
With the beginning of the NWO, the functioning of the NWF and the operation of the budget rule were suspended. All oil and gas revenues began to go to the federal budget of the Russian Federation, which until recently allowed the Ministry of Finance to maintain it in a deficit-free state. For ten months, according to the Ministry of Finance, oil and gas revenues received by the budget reached 4,8 RUB trillion.
The most serious event in the life of the National Welfare Fund this year was also, that part of his assets were frozen at the end of February. About freezing 300 billion dollars. assets of the Bank of Russia (also at the end of February) talking and keep talking. But I would like to remind, what is included in the mentioned 300 billion part of the currency belongs to the Ministry of Finance, is the currency of the NWF. The work was organized as follows: The Ministry of Finance opens foreign currency accounts with the Central Bank, and the latter places the funds of the Ministry of Finance in different currencies and in different financial instruments (predominantly bank deposits and treasury securities of other states).
As of 1 February 2022 g. the volume of the NWF amounted to 13 610 271,7 million rubles, or 10,2% VVP, projected for 2022 year. Part of the funds of the NWF (about 35%) at that time was placed in shares and bonds of Russian issuers (the so-called investment part of the Fund). The remaining funds are the so-called "liquid part", consisting predominantly of foreign currency. Plus some liquid funds - gold and a small amount of rubles. On separate accounts for the accounting of funds of the National Welfare Fund in the Bank of Russia, 38,6 billion, 4,2 billion pounds, 600,3 billion Japanese yen, 226,8 billion Chinese yuan, 405,7 tons of gold in impersonal form, 266,1 million rubles. The volume of the liquid part of the NWF for 1 February was 6,6% VVP, or 8,8 trillion rubles (112,7 billion dollars.). so, the freezing of foreign exchange assets of the Bank of Russia meant, what happened and the freezing of foreign exchange funds of the NWF (excluding Chinese yuan).
If converted to US dollars, to the 1 February, the stock of euros in the NWF at the then exchange rate was equivalent to 44,8 billion dollars., stock pounds - 5,6 billion dollars., stock of the yen 5,2 billion dollars. The total amount of “toxic currencies” included in the NWF amounted to 55,6 billion dollars. Overnight, exactly half of the liquid part of the NWF evaporated!
Last week, the Ministry of Finance published information on the state of the NWF at the end of October this year. The total volume of the NWF - 11.374,08 bn. (equivalent to 8,5% VVP). What is surprising: The financial statements of the Ministry of Finance do not in any way reflect the fact, that half of the liquid part of the NWF was frozen at the end of February. Ministry of Finance, does not hesitate to record in its reporting the volumes of individual "toxic" currencies as part of the NWF for 31 October: 45,73 billion; 4,94 billion British pounds; 602,70 billion Japanese yen. And: CNY - 301,72 billion. chinese yuan, 0,53 billion Russian rubles and 554,91 t of monetary gold.
Lots of questions here. The main: so the liquid part of the NWF in the form of three "toxic" currencies is frozen or not frozen? Judging by all the messages and signs, frozen. Why, then, does the Ministry of Finance show “dead donkey ears” in its reporting?, without making the reservations inherent in professional financiers, what is the euro, pounds and yen in the Fund are frozen? After all, it would be necessary to say at least in accounting language, what is "non-working", or "problematic", Fund's assets. This is unprofessional or a scam.?
Yes, and in oral presentations, the Minister of Finance Anton Siluanov is silent about, that half of the liquid funds of the Fund are seized, naming fictitious Fund figures. I guess, What could the Minister say?, if asked about it. is he, probably, would say: it was the Central Bank that froze the currency. And his (Central Bank) obligations to the Ministry of Finance remain valid. At the right time, the Central Bank will transfer these funds to the Ministry of Finance in ruble form at the corresponding euro exchange rate, pounds or yen.
I will continue. The mentioned rubles will come off the printing press of the Central Bank and will not be provided with anything. In addition, inflation will be untwisted. And inflation is a hidden taxation of the entire population. The Ministry of Finance's idea of creating a "currency bank" failed, and this fiasco will ultimately be paid for by millions of Russian citizens.
remind, as before, in the so-called prosperous years, the assets of the Fund, placed in foreign banks and Western treasuries brought very meager returns. And sometimes loss. In today's environment, these losses are already inevitable.. And the Ministry of Finance records them in its reporting on the NWF. On the "liquid part" of the Fund, the losses amounted to (at the end of the month, billion rubles.): february 3,08; March – 4,80; April - 4,38; May – 3,36; June - 3,42; July - 1,28; August – 3,43; September - 11,51; October - 7,12. Total for nine months total losses - 42,38 bn. And maybe more in a year. 50 billion rubles. I'll note along the way, that in the “investment part” of the NWF, the losses are even steeper, but that's a topic for another discussion..
There is another important question, concerning the Fund's currency composition presented by the Ministry of Finance. The mentioned values of "toxic" currencies in the Fund at the end of October differ from those indicators, which were at the end of February. That is, at that moment, when it was announced, that the work of the Fund is frozen until the time, when new rules for such work will be determined. So, at the end of February, the assets of the National Welfare Fund of the euro were 38,56 billion units, and at the end of October 45,73 billion. For pounds sterling, the figures were equal respectively: 4,18 billion and 4,94 billion units; in yen: 600,30 billion and 602,70 billion units; in Chinese yuan 226,78 billion and 301,72 billion. meals.
It turns out, that in eight months, the foreign exchange reserves of the NWF increased by 7,17 billion (on 18,6%), 0,76 billion pounds (on 18,2%), 2,40 billion yen (on 0,4%) 74,94 billion yuan (on 33,0%). so, contrary to the official statements of the monetary authorities (Central Bank and Ministry of Finance), that they do not work with "toxic" currencies and recommend that all Russian participants in the foreign exchange market abandon "toxic" currencies in favor of "friendly" ones, The Ministry of Finance somehow builds up stocks of "toxic" currencies. true, according to the latest data, The Ministry of Finance has been especially energetic in accumulating the Chinese yuan since February. But here comes a series of new questions.: who conducts transactions for the purchase of foreign currencies to replenish the NWF?
As I already said, to 24 February, the Bank of Russia acted as the agent of the Ministry of Finance for foreign exchange transactions. But 28 February he announced, which completely stops operations with foreign currencies. On the website of the Bank of Russia on the page, fixing the daily operations of the Central Bank with currency, the ninth month are dashes (no transactions like buying, as well as for the sale of currency). Who is now conducting mysterious operations in the interests of the Ministry of Finance to increase the foreign exchange reserves of the NWF? On this issue - complete silence on the part of both the Central Bank, and the Ministry of Finance.
My working version is: The Central Bank and the Ministry of Finance quietly continue foreign exchange operations, related to the NWF. I want to draw attention to that, that the mysterious item “Other assets” appeared in the monthly balance sheets of the Central Bank. rather, this line was previously in the balance sheet of the Central Bank, but it was purely "technical", amounting to fractions of a percent in relation to the total value of assets. And here is the latest data for the end of October: the value of "Other assets" amounted to 8.769,0 billion rubles., or 18% all assets of the Bank of Russia. By the way, this position more than doubled the value of the “Credits” position. And amazing, that the Bank of Russia does not disclose the content of the position “Other assets”. True military secret!
so, obtained, that activity, associated with the NWF, did not stop, as it was officially announced at all levels after 24 February. This activity was also reflected in, that the accumulation of "toxic" currencies continued - the euro, British pound sterling, Japanese yen. Which again contradicts the official calls of the authorities to get rid of the currencies of unfriendly countries as soon as possible..
Even if there was no sanctions war and the threat of frost, accumulation of currencies for long periods (namely, this was the main idea of the FNB) today, from an economic point of view, reckless. Lend yourself: inflation in many Western countries has stepped over the bar 10 per cent per annum. If this currency lies in the Ministry of Finance's "box" of the National Welfare Fund for several years, what's left of her, when the currency from the "pod" will be withdrawn and spent on the purchase of something useful?
Some experts have calculated, what losses we would incur with these "toxic" currencies, even if there was no threat of freezing. Calculations refer to the euro. On 1 January 2022 of the year in euros we have been nominated 33,39% of all international reserves of the Russian Federation (from the total to 630,6 billion). I.e 210,55 billion, or at that rate approximately 185 billion. Since then, over three quarters, cumulative inflation in the Eurozone has amounted to 7,9%. In this way, 14,6 billion euros have already burned. In October, there was an additional approximately 1,5% inflationary impairment. Total for ten months 17,8 billion. And in a year it should exceed 20 billion. And if the euro is stored for years, losses are multiplied. Alas, with the so-called "friendly" currencies the same story. They can depreciate against the ruble and at the same time lose purchasing power as a result of inflation.. take, eg, CNY. Inflation in China is moderate, it's true. But the exchange rate of the yuan, as always, decreases. From the beginning of the NWO to mid-September, the yuan weakened against the ruble by 9%. And against the US dollar, the Chinese yuan since the beginning of the year by the end of October depreciated by 13%.
There has always been criticism of the FNB. She got stronger after 24 February. Many in Russia thought, that the functioning of the FNB should not be suspended, and stop completely. FNB does not work for Russia, and it even works very well for its geopolitical opponents. At first, accumulation of foreign currencies means lending to those western countries, which these currencies issued. Secondly, these currencies can be frozen, and then confiscated (t. it is. stolen) the same West. Let me remind you again: from the National Welfare Fund, a week after the start of the NWO, the currency was stolen in the amount of, equivalent 55,6 billion dollars.
Alas, the Russian parliament has just passed a law, providing for the preservation of the notorious budget rule for 2023-2024 years (true, in a noticeably relaxed form.). And since the budget rule is preserved, it means that the FNB is preserved. This cannot but complicate the struggle declared by the Russian authorities for economic sovereignty and economic mobilization..
Valentin KATASONOV
