By Andrey Ostroukh
SOCHI, Russia--Russia is considering diversifying its debt
portfolio away from countries that have imposed sanctions on Moscow
and into the papers of its Brics partners, Finance Minister Anton
Siluanov said Saturday.
Australia, Canada, the European Union, Japan, the U.K. and the
U.S. have imposed sanctions against Russia in recent months to
punish it for the annexation of the Ukrainian region of Crimea and
for supporting anti-Kiev rebels in eastern Ukraine. The sanctions
have pressured Russia's finances, prompting the Kremlin to seek
tighter ties with the emerging world.
Speaking on the sidelines of an annual investment forum in the
Black Sea town of Sochi, Mr. Siluanov said the Finance Ministry
wants to diversify its investment basket, and is looking for higher
yields without too much risks. He said the ministry will consider
buying papers issued by Brazil, India, China and South Africa,
which along with Russia are known collectively as the Brics
countries.
"[We would like to] walk away from investing in papers of the
countries that impose sanctions against us," Mr. Siluanov said,
adding that the reshuffle would be carried out gradually. He didn't
elaborate on when the first purchases of Brics debt may take
place.
Mr. Siluanov said such a move wouldn't be aimed at punishing the
West because Russia's share in their papers is so small they
wouldn't feel the effect.
When asked whether the diversification would mean Russia was
preparing for financial isolation in the long term, Mr. Siluanov
said he hopes Western sanctions would be lifted soon but said that
his ministry should be ready for other scenarios.
Russian Economy Minister Alexei Ulyukayev said Saturday he
expects no more sanctions against Russia but doesn't expect the
existing measures to be scrapped in the near term, Russian news
agencies reported.
As of early September, the Finance Ministry's reserve fund,
accumulated over years of buoyant oil prices and kept in low-risk
debt securities, stood at $91.7 billion, or 4.7% of the country's
gross domestic product. In early September, the ministry also had
$85.3 billion in Russia's National Wealth Fund, meant for
infrastructure investments.
After draining more than $70 billion in net capital outflow in
the first half of the year, Russia is on track to post its weakest
growth in a decade--excluding 2009, when the economy contracted
amid the global crisis.
Mr. Siluanov said that OAO Rosneft, the country's largest oil
producer, and OAO Novatek, its No. 2 gas firm, may each receive
from 80 billion rubles ($2.08 billion) to 150 billion rubles from
the National Wealth Fund by the end of this year, with both
companies facing pressure from the effects of the sanctions.
Amid the need to support hungry-for-money companies, the
ministry is looking at ways to plug in holes in its budget. Next
year, Russia may extract up to 500 billion rubles from the reserve
fund, tapping the coffers for the first time in six years. The
government may also introduce taxes for public catering, taxis and
accommodation at hotels, Mr. Siluanov said.
But despite the budget constraints, Russia will stick to its
international agreements and will channel money into a planned
Brics bank.
"If there's an agreement on the international level, it has to
be fulfilled," Mr. Siluanov said.
The five Brics countries will open a development bank by 2016
and create an alternative to the International Monetary Fund to
support the bloc's economies, Russia's finance minister said
Wednesday.
Each Brics country will contribute $2 billion to the bank's
funds from their budgets over the next seven years. They will also
consider creating a fund, which Mr. Siluanov dubbed a "mini IMF."
China would contribute $41 billion to this fund, another $5 billion
would come from South Africa, while Russia, Brazil and India would
each provide $18 billion from their foreign-exchange reserves.
Write to Andrey Ostroukh at andrey.ostroukh@wsj.com