13 Sep 2019 15:44

If NWF management system to be changed it could be done via oil cut-off price - Nabiullina

SOCHI. Sept 13 (Interfax) - If the system for managing the National Wealth Fund (NWF) is to be altered this could be done by changing the cut-off price for oil, Central Bank Governor Elvira Nabiullina said at an international banking forum organized in Sochi by the Association of Russian Banks.

"You know, I have spoken out against making the cut-off price for the fiscal rule very high. Alexei Leonidovich [Kudrin] suggested at the time that the cut-off price be raised. I consider that might have been correct at the time, but now we have built up a certain cushion, we are not in a position where our cushion was small. And if the NWF is to be altered then it would be better to do this transparently, perhaps via the cutoff system," she said.

"We see that those decisions that will be reached regarding the NWF might seriously affect the macroeconomic configuration and issues of stability," she said.

The fiscal rule has helped reduce Russia's exposure to external shocks, above all to the oil price, Nabiullina said. The Bank of Russia's wishes for the government are that decisions to spend the NWF do not increase that exposure again, she said.

There are various means of investing NWF money. "One of them, is we were to spend say not the while NWF surplus but a portion of it would essentially be tantamount to changing the oil price cutoff," she said.

Deputy Finance Minister Vladimir Kolychev said raising the oil cut-off price would lead to higher budget spending, which would hardly better than investing NWF money for the benefit of future generations.

"If this is linked in some way to the question of what assets to invest NWF money in, then the idea of spending windfall revenue is simply not commensurate with the idea of investing in assets, including domestic assets. In other words I don't entirely understand the sense in seeking an alternative to investing. We'd have to talk to the CBR to understand what they have in mind," he told reporters, commenting on Nabiullina's remarks.

"Nobody regards investing NWF money as an expenditure but as an investment needed to improve returns for future taxpayers, for future generations," he said. Raising the cut-off price would result in higher budget revenue and, as a result, spending. "That would just be spending," Kolychev aid.

"We are definitely not considering this [raising the cut-off price]. The government has not discussed the cut-off price. We can discuss it with the CBR but I doubt the government's position will change," he said.

It is possible that "in some period we'll have to think about lowering the cut-off." "If have an oil price that is lower than the present cut-off price for a lengthy period then it [lowering the cutoff] will happen anyway, because we have not accumulated that much in reserves to cover revenue in such a way for decades," he said.