Deteriorating economic conditions pushed the government to increase the share of the NWF that could be invested in domestic infrastructure. To remind, a 40% cap on domestic investments from the National Welfare Fund (NWF) was approved last year, which, adjusted for previously (back in 2008-2009) disbursed deposits to VEB, might have potentially translated into RUB 500bn in new infrastructure investments. Two projects – BAM/Transsib railroad and the Central Ring Road – with a total RUB 300bn quota from the NWF have been approved, but only about RUB 100bn has actually been disbursed.
Adding on top of the approved, but not disbursed, quota an additional RUB 600bn implies that we are still waiting for about RUB 1.0tn of NWF-sponsored investments to 'hit' the economy and there are signs the approval process might be accelerated as some technical hurdles are being lifted. For instance, the same decree allows the government to lift the rating criteria if needed (getting a triple B rating for an infrastructure project SPV was a big issue).
The timing is not clear, but if we spread RUB 1.0tn over 2014-2016 we will get about RUB 330bn in annual capex injections. This would likely support recovery in investment and, more broadly, economic growth starting 2015 (maybe late 2014). This shapes well with our call for regaining growth momentum and a recovery in GDP growth to 2.6% in 2015.