Russia poured approximately $9.5 billion into an emergency fund as it scrambles to withstand Western sanctions that have severely damaged its economy and placed the country at risk of default.
The infusion of cash came from proceeds in the sale of Russian oil and gas. The Kremlin has continued to reap huge profits from energy exports despite economic penalties and trade restrictions in response to Russia’s brutal invasion of Ukraine.
“The funds will be used in part to implement measures aimed at ensuring the stability of economic development in the conditions of external constraints,” the Kremlin said in a statement on the funds.
Russia is using the emergency fund to cover domestic deficits, pay for social programs such as pensions and fortify the country’s largest companies in the face of international sanctions, according to Reuters. The Kremlin previously added the equivalent of $13.56 billion to the fund in May.
The European Union has mulled imposing a full embargo on Russia oil and gas shipments in response to the invasion. However, a ban has yet to be implemented, with some nations raising concerns that it would trigger a full-blown energy crisis for nations heavily reliant on Russian energy.
As of May, Russia’s revenue from oil shipments was up 50% compared to the previous year, according to the International Energy Agency, with the country earning about $20 billion each month, Bloomberg reported.
The oil revenue is one of few lifelines available to the Russian economy, which has sputtered since the raft of international sanctions were implemented. Western nations have frozen roughly half, or about $300 billion, of Russia’s foreign currency and gold reserves.
An analysis by the Institute of International Finance projects the Russian economy will contract 15% this year and an additional 3% in 2023 – erasing 15 years of economic progress, according to Reuters.
Russia is also scrambling to avoid the first default on its foreign debt since World War I.
Earlier this month, an international panel determined that Russia had committed a “failure to pay” credit event by missing an interest payment on an overdue dollar-denominated bond. The White House recently indicated that it expects a default to occur in the near future.
Meanwhile, top Kremlin spokesman Dmitry Peskov accused the West of “pushing Russia into an artificial man-made debt default” through its sanctions.