Russia's international reserves were reported at $609.5bn as of January 3, a fall of $1.8bn from the previous week but up slightly from the $598.5bn on reserves on the same day a year earlier, according to the Central Bank of Russia (CBR). (chart)

The amount of cash in Russia’s rainy-day fund, the National Wealth Fund (NWF) was down more sharply in 2024 as the Ministry of Finance (MinFin) has been dipping into it to partly fund the budget deficit.

The amount of liquid assets stood at RUB3.81 trillion ($37.47bn) as of January 1, representing 2% of the projected 2024 GDP. that is down sharply from a year earlier when the liquid assets were RUB5.01 trillion, equivalent to 3% of the projected 2023 GDP.

Despite the decline of RUB1.2 trillion ($18.53bn) of liquid assets in the NWF, there is still more than enough to cover the whole budget deficit for at least two years. The federal budget deficit was projected to end 2024 at RUB3.3 trillion (1.7% of GDP) but in 2025 the deficit is slated to fall significantly to RUB830.5bn (0.4% of GDP), according to the budget.

In 2024, the budget deficit expanded significantly. At the start of the year the deficit was forecast to be only 0.9% of GDP, but it almost doubled by the end of the year.

The same may happen in 2025 as initially military spending was slated to be cut, but in the final version it was increased by a quarter; Russia spent 6% of GDP (RUB10.3 trillion) on defence in 2024 but MinFin plans to increase that to 8% (RUB13.5 trillion) in 2025.

The National Wealth Fund serves as a financial safety net, and its liquid assets are often employed to stabilise the economy during fiscal shortfalls.

Throughout 2024, Russia's international reserves experienced fluctuations, reaching a peak of approximately $633.7bn on September 30, 2024, and a low of around $582.0bn on February 23, 2024.

The fluctuations were due to by factors such as foreign exchange market interventions, valuation changes, and adjustments in foreign currency assets and gold holdings, which make up half of Russia’s non-frozen reserves.