Russia, like other oil-rich countries, saved some of its oil revenues for future generations and stability. After 2022, Moscow started to use the National Wealth Fund to finance a war that creates future instability.
From oil rent to the “fortress economy”
The origins of Russia’s National Wealth Fund lie in the political economy of the early 2000s. After the difficult 1990s, Russia entered a much more favorable global environment. Oil and gas prices rose, demand for raw materials increased, and the state suddenly had access to revenues that had been unimaginable during the Yeltsin period.
This change was not only economic. It also coincided with the consolidation of Vladimir Putin’s rule. The expansion of the resource rent made it easier to stabilize the state, redistribute wealth within the ruling elite and reduce the social pain left by the post-Soviet transition. In that sense, the oil boom did not lift everyone equally, but it did lift many boats at once. The richest and most politically connected benefited the most, but ordinary Russians also experienced rising incomes, more regular salaries and pensions, and a sense that the chaos of the 1990s had finally been overcome.
At the same time, Russia was still more open to the world than it is today. Foreign capital entered the Russian economy, Western companies expanded their presence, and Russian macroeconomic management became more professional. This was the period when the idea of saving part of the oil windfall became an important component of economic policy.
The mechanism evolved over time. In 2004, Russia created the Stabilization Fund. In 2008, it was split into the Reserve Fund and the National Wealth Fund. In 2018, after the Reserve Fund had been depleted and absorbed, the National Wealth Fund became the main fiscal reserve of this type.
Officially, the logic was simple. When oil and gas revenues were high, the state saved part of them. When prices fell, or when the budget came under pressure, these savings could be used. The fund also had another declared purpose: supporting the pension system. This mattered because Russia, like many ageing societies, has long faced demographic pressure. A shrinking or insufficiently large working-age population makes it harder to finance pensions through current contributions alone.
Thus, the National Wealth Fund was designed as both a macroeconomic stabilizer and a long-term social reserve. It was part of what analysts often called Russia’s “fortress economy”: a system built to reduce vulnerability to external shocks, oil price cycles and financial crises.
Yet even before the war, this fortress was not as solid as it looked. The fund had two very different components. One part was liquid: foreign currency, gold and other assets held on accounts at the Central Bank, which could be used relatively quickly. Another part was much less liquid: investments in infrastructure projects, deposits, bonds, shares of state-linked companies and other instruments. The headline size of the fund therefore always overstated the amount of money that could be mobilized immediately.
There is also an important technical distinction. The National Wealth Fund is connected to Russia’s international reserves, but it is not identical to them. The liquid part of the fund, when held in foreign currency or gold at the Central Bank, is counted as part of Russia’s reserves. But the fund’s illiquid investments in companies or infrastructure are not the same kind of reserve asset. In simple terms, Russia’s international reserves are the country’s large financial wallet; the National Wealth Fund is one specific pocket within it, partly liquid and partly tied up.
This distinction became crucial after February 2022.
War turned the fund from a reserve into a budget instrument
The full-scale invasion of Ukraine changed the role of the National Wealth Fund. Russia was hit by sanctions, lost much of its access to Western financial markets, and saw a large part of its external economic relations redirected toward China, India, Turkey and other non-Western partners. At the same time, 2022 brought a temporary windfall from high energy prices. But this was not a stable foundation for long-term war financing.
From 2023 onward, the pressure became clearer. Russia’s federal budget became structurally more difficult to balance. Military spending increased sharply. The defense industry expanded. Payments to soldiers, procurement, security spending and support for occupied territories all required growing resources. Meanwhile, civilian sectors of the economy could not generate enough additional revenue to cover this new fiscal burden without further taxation, borrowing or redistribution.
This is where the National Wealth Fund changed its practical meaning. It was no longer merely a reserve against oil price volatility or a long-term support mechanism for pensions. It became one of the main sources from which the state could cover budget deficits while preserving the appearance of fiscal control.
The numbers show the shift. At the beginning of 2022, the liquid part of the National Wealth Fund was roughly 8.8 trillion rubles, or about 114 billion dollars. It accounted for around 62% of the fund. In January 2026, the liquid part had fallen to about 4.1 trillion rubles, or roughly 52 billion dollars, and its share had dropped to about 31%. In April 2026, liquid assets were around 3.9 trillion rubles, or less than 48 billion dollars, approximately 29% of the total fund.
This is the key point: the fund has not disappeared, but its usable core has become much smaller. Russia can still report a large National Wealth Fund on paper, because the total includes less liquid assets. But the portion that can be quickly used to support the budget has been sharply reduced.
The change is also visible in the structure of the fund. Before the war, Russia still relied heavily on assets associated with the global financial system, including Western currencies. After sanctions and the freezing of part of Russia’s reserves, the fund was restructured. Dollars and euros disappeared from its liquid composition. The remaining liquid assets shifted mainly toward Chinese yuan and gold.
This was presented as de-dollarization and financial sovereignty. In reality, it was also a sign of narrowing options. The yuan is useful for trade with China, but it is not as liquid, universal or politically neutral as the dollar or euro once were for Russia. Gold is a strong symbolic asset, but it is not a magic shield either. It must be sold, swapped or monetized when the budget needs rubles.
The gold story is especially revealing. Gold appeared in the fund’s structure shortly before the war. At the beginning of 2022, the National Wealth Fund held about 406 tonnes of gold. By January 2023, this had risen to more than 550 tonnes. But then the decline began. By January 2026, only about 155 tonnes remained, and by the latest available data for early 2026, around 145 tonnes. In other words, Russia did not only “de-dollarize” the fund. It also began consuming the assets that were supposed to replace Western currencies as the new safe foundation of its reserves.
This is why the transformation of the National Wealth Fund matters. It shows not only how much Russia has spent, but what kind of resilience it is now relying on. The Kremlin is converting past oil wealth into present military endurance.
Russia is waging war at the expense of future generations
The problems around the National Wealth Fund have become a kind of litmus test for the Russian economy. They do not mean that Russia is on the verge of immediate financial collapse. That would be too simple and most likely wrong. Russia still has tax capacity, domestic borrowing, energy exports, state control over key sectors and the ability to shift costs onto households and businesses.
But the fund shows that the quality of Russia’s stability has deteriorated.
First, the reserve has shrunk. The liquid part of the fund is much smaller than it was before the war. This limits the government’s room for maneuver in the event of another shock: a fall in oil prices, a stronger sanctions regime, new military setbacks, domestic financial instability, or the difficult economic adjustment that may come after the war.
Second, the fund is no longer primarily a future-oriented instrument. A sovereign wealth fund is supposed to smooth cycles and protect future generations from the volatility of commodity dependence. Russia is doing the opposite. It is spending its future cushion to finance the present costs of war.
Third, the fund cannot easily be rebuilt. For that, Russia would need either a long period of high energy prices, a significant increase in export revenues, or a reduction in military and security spending. None of these conditions is guaranteed. If global oil prices remain moderate, or if Ukrainian strikes and sanctions continue to complicate Russia’s energy exports, replenishing the fund will be difficult.
There may be temporary relief. Tensions in the Middle East, risks around the Persian Gulf, or geopolitical shocks can push oil prices upward. But a temporary price spike is not the same as a sustainable fiscal model. Russia’s problem is not only revenue volatility; it is the structural growth of wartime expenditure.
This leaves the Kremlin with uncomfortable choices. It can continue using what remains of the liquid part of the fund. It can raise taxes. It can borrow more domestically. It can cut or postpone civilian spending. It can pressure state companies and private business. Or it can accept higher inflationary and financial risks. Most likely, it will use a combination of all these tools.
But each of them has a cost. Higher taxes weaken business. More borrowing competes for domestic financial resources. Lower civilian spending damages long-term development. Inflation erodes household welfare. And further depletion of the National Wealth Fund reduces the state’s ability to respond to future crises.
This is why the fund is politically important. It tells us that the war is not only being fought on the physical front in Ukraine. It is also being fought on Russia’s fiscal front. The Kremlin still has resources, but it is burning through the reserves accumulated during the most favorable years of the Putin era.
The National Wealth Fund was born from the logic of caution: save part of the oil rent, protect the budget, support the pension system and reduce vulnerability to commodity cycles. After four years of full-scale war, that logic has been transformed. The fund is still there, but it is no longer the same instrument. Its liquid part has fallen sharply, its structure has shifted toward yuan and gold, and even its gold holdings have been heavily reduced.
Russia is not bankrupt. It is not unable to finance the war tomorrow. But the National Wealth Fund shows the price of this endurance. The Kremlin has been using accumulated oil wealth to buy time, preserve social stability and sustain military spending. This can work for a while. It cannot work indefinitely without consequences.
The deeper issue is not that Russia has spent money. All states spend reserves during crises. The issue is that Russia is spending a fund created for future stability on a war that creates future instability. The more the National Wealth Fund is consumed, the more Russia’s apparent resilience becomes a form of delayed vulnerability.
