September 19, 2019 / 11:37 AM / a month ago

UPDATE 1-Russia to step up budget spending on investment projects

(Adds figures, background)

MOSCOW, Sept 19 (Reuters) - Russia is set to increase spending over the next three years on large investment and infrastructure projects meant to boost economic growth, the finance ministry said on Thursday.

The Russian economy is on pace to grow just over 1% this year, down from 2.3% last year, and the government has been eager to find new sources of economic growth.

The investment and infrastructure projects range from road construction to the modernisation of healthcare. Russia says they’re meant to make the country one of the world’s top five economies by 2024.

The state plans to spend 2 trillion roubles on the projects next year, then spend 2.3 trillion roubles in 2021, the ministry said. Spending is expected to reach 2.7 trillion roubles in 2022, it said.

The finance ministry had planned to start spending excess cash from Russia’s National Wealth Fund (NWF), part of the country’s sovereign reserves, once it reached its minimum size of 7% of growth domestic product.

The ministry now projects that the liquid portion of the fund will total 8.5% of the GDP by mid-2020. As of Sept. 1, the NWF stood at $122.9 billion.

The ministry said the projected funds in the NWF will be enough t for the country to withstand economic stress, including the possibility of oil prices dropping to $25 per barrel for two to three years.

The ministry also said that Russia’s budget surplus, which is expected to be 0.8% of the GDP next year, will shrink to 0.2% in 2022. (Reporting by Darya Korsunskaya, writing by Gabrielle Tétrault-Farber; editing by Katya Golubkova, Larry King)

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