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Stabilization Fund

The Stabilization Fund is a special state fund of the Russian Federation that has been formed and used for purposes of stabilizing the economy.

The Stabilization Fund performs the following functions:
  • acts as an inbuilt stabilizer (alongside such commonly known and used stabilizers as the progressive tax and unemployment benefits);
  • gives additional stability to the government's finances;
  • can serve as a source of funding for investment programs that reduce budget outlays of the future periods.
In essence, it represents financial assets which are directly disposed of by the government and not the Federal Assembly by means of the budget.

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Since February 1, 2008, the Stabilization Fund is divided into two parts: theReserve Fund (RUR 3,069 billion) and the National Welfare Fund (RUR 782.8 billion). The total volume of funds to be credited to the account of the oil and gas transfer is established in budget laws and tied to the size of gross domestic product (GDP): 6.1% of GDP for 2008, 5.5% for 2009, 4.5% for 2010. After 2010 this volume is fixed at 3.7% of GDP.

At the end of 2004, the size of the Fund topped RUR 500 billion, and the following year a part of the surplus amount was used to repay foreign debt and offset the Pension Fund deficit in the following volumes:
  • RUR 93.5 billion (the equivalent of US$ 3.3 billion) was used to repay a debt to the International Monetary Fund;
  • RUR 430.1 billion (the equivalent of US$ 15 billion) was used to repay a debt to member states of the Paris Club;
  • RUR 123.8 billion (the equivalent of US$ 4.3 billion) was used to repay a debt to Vneshekonombank on loans extended to the Russian Finance Ministry in 1998 - 1999 to pay principal and interest on the foreign debt of the Russian Federation;
  • RUR 30 billion (the equivalent of US$ 1.04 billion) was used to offset the deficit of the Pension Fund of the Russian Federation.
RUR 605 billion was spent for similar purposes in 2007 and RUR 12 billion in 2007.
As of February 1, 2008, when it was divided, the fund amassed RUR 3,852 billion rubles.

Over the period from July 24, 2006 (the date when money from the Stabilization Fund started to be invested) to December 15, 2007, combined return on investments totaled RUR 174.78 billion (in the year from December 15, 2006, to December 15, 2007 - RUR 151.89 billion). Return on investments in US dollars was 10.94% and on ruble investments - about 5%.
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