In a shift to address budgetary demands, Russia’s Central Bank has initiated the sale of physical gold from its reserves. This change involves “mirroring” Finance Ministry transactions within the National Wealth Fund, moving from paper-based operations to actual sales on the domestic market. The National Wealth Fund’s gold holdings have significantly decreased since the invasion of Ukraine, indicating a reliance on these assets to fund wartime spending. These gold sales, along with similar yuan transactions, aim to inject foreign currency into the domestic market and stabilize the ruble amid declining oil and gas revenues.
Read More
Russia’s Economic Development Ministry drastically lowered its 2025 Urals crude oil price forecast to $56 per barrel, a level unseen since the 2020 pandemic. This significantly undercuts the budget’s $69.70 per barrel projection and the $60 cutoff triggering National Wealth Fund withdrawals. The price drop reflects a global economic slowdown and rising recession fears, resulting in substantial revenue shortfalls for the Russian budget. Analysts project billions of rubles in deficit if prices remain low, necessitating further NWF liquid asset depletion.
Read More
Chancellor Rachel Reeves is navigating complex financial challenges, including a significant increase in defense spending and the reallocation of £27.8 billion from the National Wealth Fund to bolster the defense sector and leverage private investment. This is coupled with a £2.26 billion loan to Ukraine funded by seized Russian assets, a first-time application of such funds for military aid. Further complicating matters are strained US-UK relations regarding Ukraine, impacting international security and the potential for a US trade deal. Reeves aims to balance the budget through measures targeting welfare, civil service efficiency, and NHS productivity, despite facing economic headwinds and limited fiscal headroom.
Read More
John Q. Hosedrinker