The Russian government increased its emergency reserve fund by 551.4 billion roubles ($9.5 billion) on Thursday, as the Kremlin ramps up its stimulus package to buffer the economy from the effects of Western sanctions and its operations in Ukraine.
“The funds will be used in part to implement measures aimed at ensuring the stability of economic development in the conditions of external constraints,” the administration stated in a statement announcing the financial infusion.
The additional revenues produced by Russia’s essential oil and gas exports, which bring in hundreds of millions of dollars per day to the government despite Western sanctions, contributed to the increase in reserves.
Western nations have imposed unprecedented penalties on Russia, including the freezing of about half of the central bank’s gold and foreign currency holdings, after Moscow launched tens of thousands of soldiers into Ukraine on Feb. 24 in what it called a “special military operation.”
Russia traditionally channeled oil and gas income into its $198 billion national wealth fund, which was meant to finance huge investment projects in the event of a disaster.
However, the emergency reserve fund is a more adaptable source of funds, enabling the government to fill its own deficit, support social outlays like as a recent emergency increase in pensions, and respond to the oncoming economic catastrophe.
In May, the government contributed 791.6 billion roubles ($13.56 billion) to the same fund.
Russia’s economy is on track for its worst recession in more than two decades, as it confronts a “full disintegration of 30 years of investment” that may wipe out 15 years’ worth of economic advances, according to the Institute of International Finance.
The Kremlin has already begun deploying resources to assist the country’s top firms in an effort to ease an economic crisis that has already seen inflation soar to its worst levels in two decades and is expected to cause a drop in household wages in the coming months.
The government invested $4 billion in Russian Railways, the country’s biggest employment, in May, and has promised $1.75 billion in state-owned carrier Aeroflot.
(1 dollar = 58.22 roubles)