Full Breakdown
Russia Liquidates Gold Reserves Amid Economic Strain
1/21/2026, 8:28:23 PM
Overview of the Liquidation of Gold Reserves
The Russian government has liquidated approximately 71% of its sovereign gold reserves from the National Wealth Fund (NWF) over the past three years, primarily to finance its budget and ongoing military efforts in Ukraine. Data from Russia’s Ministry of Finance indicates that the volume of gold held in the NWF decreased from 554.9 metric tons in May 2022 to 160.2 tons by January 2025. This significant sell-off, which included a reduction of 196 tons in 2023 and an accelerated drawdown of 171 tons in 2024, has been a response to weakened traditional revenue sources due to international sanctions.
Economic Context and Implications
The NWF's total liquid assets, which include gold and yuan-denominated holdings, fell to 4.1 trillion rubles by January 2025, marking a 60% decline from pre-war levels. The Russian federal budget for 2026 initially projected no withdrawals from the NWF, but new U.S. sanctions and a drop in oil prices forced the Kremlin to revise these plans. The average price of Russian Urals crude fell to $39 per barrel, prompting the Ministry of Finance to sell gold and foreign currency at a rate of 12.8 billion rubles per day in early 2026. Analysts predict that if current market conditions persist, Russia may deplete up to 2.5 trillion rubles from the NWF in 2026, representing about 60% of its remaining liquid reserves.
Criticism and Opposition
Economists from Gazprombank have expressed concerns that the actual budget shortfall for 2026 may reach between 5 to 5.5 trillion rubles, despite the government's target of reducing the deficit to 3.8 trillion rubles through new revenue measures, including increased value-added tax (VAT) and higher levies on small businesses. Natalya Milchakova, chief analyst at Freedom Finance, warned that ongoing logistical constraints and weakened demand for oil exports continue to strain Russia’s fiscal position, potentially leading to further tax increases on businesses and households.
Official Statements & Responses
The Russian Ministry of Finance has acknowledged the necessity of these asset sales to cover budget deficits exacerbated by declining oil revenues. The government’s strategy reflects a shift in fiscal policy, with officials indicating that the sale of physical gold marks a departure from previous internal transfers within the NWF.
Conflicting Reports & Gaps
While the Ministry of Finance has provided data on the liquidation of gold reserves, there is a lack of clarity regarding the long-term implications of these sales on Russia's economic stability. Additionally, discrepancies exist in projections regarding the budget shortfall, with some analysts suggesting that the government’s estimates may be overly optimistic.
What's Next
As Russia navigates its economic challenges, the government is expected to continue selling gold and foreign currency to manage budget deficits. The upcoming parliamentary session will likely address further fiscal measures and adjustments to the regulatory framework surrounding the NWF and its asset management strategies.
