Russia's reserves are shrinking and may deplete by 2026

According to economists at the Russian Presidential Academy of National Economy and Public Administration (RANEPA) and the Gaidar Institute, the Russian National Wealth Fund (NWF) could be completely empty by 2026 if oil remains cheap and the rouble remains strong.

Source: The Moscow Times

Details: As of 1 June, the NWF had 2.8 trillion roubles (about US$31 billion) left, the lowest level since 2019. In just three years, rouble reserves have more than halved, and have tripled in dollars: from 113.5 billion to 37.4 billion.

In May 2025, the Russian Ministry of Finance spent another 35.9 billion roubles (US$400 million) from the NWF to cover the budget deficit and 532 billion roubles (US$5.9 billion) to finance state projects. Notably, 300 billion roubles (US$3.3 billion) were allocated to the Moscow-St Petersburg high-speed railway, 6.5 billion roubles (US$72 million) to the purchase of aircraft, and another 1 billion roubles (US$11 million) to metro cars for St Petersburg. About 50 billion roubles (US$556 million) were spent on classified projects.

Currently, the fund has 153.7 billion yuan (US$21.2 billion) in foreign currency assets and 139.5 tonnes of gold, although before the war, reserves exceeded 400 tonnes. According to Ilya Sokolov of the RANEPA, these reserves are currently sufficient to offset losses from falling oil revenues, but in the event of a protracted crisis, the reserves could be depleted in less than a year.

The government is forced to revise the budget. Instead of the expected 10.9 trillion roubles (US$120 billion) in oil revenues, the forecast has been reduced to 8.3 trillion roubles (US$91 billion), and the budget deficit could reach 3.8 trillion roubles (US$42 billion). The NWF is planned to be used again, with 447 billion roubles (US$4.9 billion) to be withdrawn.

The Ministry of Finance is also considering lowering the "cut-off point" in the budget rule from US$60 to US$50 per barrel of Urals, which would force spending cuts of 1.5-1.6 trillion roubles (US$16.5-17.6 billion), or 0.7% of GDP.

In addition, there is a risk of income tax shortfalls: with a target of 4 trillion roubles (US$44 billion), business profits for this year have already fallen by 34%. According to Sokolov, this is a more realistic threat to the budget than decreasing oil revenues.

Background:

• The Russian National Welfare Fund was established in 2008 to accumulate surplus revenues from energy exports. It is used to cover budget deficits during crises.
• In Russia, expectations for oil prices in 2025 have been lowered.
• Forced discounts on Russian oil due to tougher US sanctions and the sharp strengthening of the rouble have hit the Russian budget's raw material revenues.

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