The government of the Russian Federation has decided to finance infrastructure projects at the expense of the National Welfare Fund (NWF).
“It is worth noting that, in accordance with the Budget Code of the Russian Federation, the NWF is intended to ensure co-financing of voluntary pension savings of citizens of the Russian Federation, as well as to ensure the balance (deficit coverage) of the federal budget and the budget of the Pension and Social Insurance Fund of the Russian Federation. At the same time, the Budget Code of the Russian Federation provides for the possibility of financing self-sufficient infrastructure projects in accordance with the list of the Government of the Russian Federation. It is important that the savings obtained from investments in securities are used for financing. Moreover, while previously the principle of investing funds after collecting a certain amount in the NWF was in force, now the priorities are shifting towards investing in projects for which decisions have already been made, and only then the issue of collecting reserves to cover the budget deficit increases. Taking into account the fact that funds are invested in self-sufficient projects, this decision seems quite justified, says Oksana Stupnikova, Dean of the Faculty of Economics, Management and Law of the North Caucasian Institute, a branch of RANEPA.
According to the expert, such a measure is due to the reduction in the volume of financing infrastructure projects through private investment.
“This is due to the fact that investors in crisis pursue a cautious policy of allocating funds, and banks grant loans to contractors very poorly. However, the state treats this area as one of its priorities and has recently offered new, effective support mechanisms (e.g. loans from the infrastructure budget applied since July 2022). The Ministry of Finance even put forward a proposal to cancel the closed list of possible areas of spending budget funds as part of financing infrastructure projects. If the government does not act today, it is obvious that funding for such projects will continue to decline. The main idea is an advance payment for contractors and will reduce the cash shortages that they previously covered with expensive bank loans from the National Benefits Fund and will not slow down the process of bringing projects to the implementation stage» — Dean of the Faculty of Economics, Management and Law of the North Caucasus Institute — RANEPA Branch Oksana Stupnikova.
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