The volume of liquid assets of the National Welfare Fund as of December 1 fell to $53.8 billion, the Russian Finance Ministry reported on Thursday. Since the beginning of the year, the free funds of the NWF, which was initially conceived as a mechanism for financing pensions and then turned into a source for patching budget “holes,” have decreased by another $2.1 billion.
Before the start of the war, the NWF held about $140 billion in liquid assets. Thus, over three years of military action, the Russian government’s “cash cushion” has deflated almost threefold.
If we exclude gold, which the fund holds in the form of impersonal metal accounts with the Central Bank, the size of its liquid assets has fallen to about $31 billion — the level with which the NWF was created in 2008, Bloomberg notes. We are talking about Chinese yuan — the last currency available to the Finance Ministry: according to its data, as of December 1, the NWF held 219.5 billion yuan.
"The fiscal buffers (of the Russian government) are approaching exhaustion," says Alexander Isakov, an economist for Russia at Bloomberg Economics. According to him, this is a "key challenge" for Vladimir Putin, who continues to increase military spending and has brought it to a record since Soviet times - 32.5% of the 2025 budget.
The authorities are using the remaining yuan from the National Welfare Fund to support the ruble, Isakov points out. In addition, the Chinese currency is going to the accounts of state corporations through the purchase of their bonds using the fund's money: 3 billion yuan was spent for these purposes in July, 2.75 billion in August, 2 billion in September, and 1.25 billion in October, according to data from the Ministry of Finance.
Meanwhile, the NWF gold is gradually being sold to cover the budget deficit: from June to early December, 50 tons of the precious metal were spent for these purposes, and its reserves in the NWF dropped to 279 tons.
The government has budgeted a deficit of 1.2 trillion rubles for 2025, 2.2 trillion in 2026, and 2.8 trillion in 2027. In total, over three years, the “hole” in the treasury will amount to 6.2 trillion rubles, which is less than the free money left in the NWF — 5.8 trillion rubles, according to the Finance Ministry’s estimates as of December 1.
As the “piggy bank” is exhausted, it will be increasingly difficult for Putin to avoid transitioning to a full-fledged “war economy,” Isakov believes. Moscow will likely “increasingly redirect scarce labor and capital from sectors deemed non-essential (services, construction and finance) to sectors deemed critical to giving Putin a military advantage,” the expert warns.
Before the start of the war, the NWF held about $140 billion in liquid assets. Thus, over three years of military action, the Russian government’s “cash cushion” has deflated almost threefold.
If we exclude gold, which the fund holds in the form of impersonal metal accounts with the Central Bank, the size of its liquid assets has fallen to about $31 billion — the level with which the NWF was created in 2008, Bloomberg notes. We are talking about Chinese yuan — the last currency available to the Finance Ministry: according to its data, as of December 1, the NWF held 219.5 billion yuan.
"The fiscal buffers (of the Russian government) are approaching exhaustion," says Alexander Isakov, an economist for Russia at Bloomberg Economics. According to him, this is a "key challenge" for Vladimir Putin, who continues to increase military spending and has brought it to a record since Soviet times - 32.5% of the 2025 budget.
The authorities are using the remaining yuan from the National Welfare Fund to support the ruble, Isakov points out. In addition, the Chinese currency is going to the accounts of state corporations through the purchase of their bonds using the fund's money: 3 billion yuan was spent for these purposes in July, 2.75 billion in August, 2 billion in September, and 1.25 billion in October, according to data from the Ministry of Finance.
Meanwhile, the NWF gold is gradually being sold to cover the budget deficit: from June to early December, 50 tons of the precious metal were spent for these purposes, and its reserves in the NWF dropped to 279 tons.
The government has budgeted a deficit of 1.2 trillion rubles for 2025, 2.2 trillion in 2026, and 2.8 trillion in 2027. In total, over three years, the “hole” in the treasury will amount to 6.2 trillion rubles, which is less than the free money left in the NWF — 5.8 trillion rubles, according to the Finance Ministry’s estimates as of December 1.
As the “piggy bank” is exhausted, it will be increasingly difficult for Putin to avoid transitioning to a full-fledged “war economy,” Isakov believes. Moscow will likely “increasingly redirect scarce labor and capital from sectors deemed non-essential (services, construction and finance) to sectors deemed critical to giving Putin a military advantage,” the expert warns.
