(Reuters] – Russia’s National Wealth Fund will serve as a cushion for a shortfall in the budget. It is expected that the fund, which contains oil revenues and contains a lot of rainy day funds, would be Russia’s main source to finance the deficit. The minister stated this Wednesday.

Russia now faces high inflation and capital flight, while facing possible default on its debt after harsh sanctions were imposed by the West to punish President Vladimir Putin’s sending of tens or thousands of troops into Ukraine in February.

Anton Siluanov, Finance Minister said that the National Wealth Fund would continue to be the primary source of financing for future expenditures. He also stated that there will be an upper limit on spending in order not to dry up the fund.

If revenues exceed our expectations, then we’ll spend less on the NWF. We will also spend less if revenues are higher than planned.

Russia will channel 50 billion Russian rubles from the NWF in order to replenish Gazprombank’s capital, as Gazprombank requires additional funding to finance infrastructure projects.

Gazprombank was not subject to some of the sanctions and Putin made it clear that foreign buyers could use Gazprombank for payment of energy supplies.

Russia has stopped the flow of gas to Bulgaria and Poland, after Poland rejected Russia’s request for payment in Russian rubles.

Siluanov said that his ministry is eager to correct Russia’s fiscal rules, which are designed to protect Russia against swings in oil price.

Russia is prohibited from spending more than the non-oil and oil revenues, together with any proceeds from oil sales above a specific oil level. Moscow has relaxed the rules to encourage state spending and borrowing in the fight against the COVID-19 pandemic. This will be done between 2020-2021.

Siluanov declared that the “old rules” cannot be used in the present circumstances. The finance ministry submitted proposals to the government for new budget rules.

Russia won’t borrow this year on its domestic market, but it could slowly return to borrowing in 2023 if the inflation rate and OFZ bond prices stabilize, Siluanov said.

($1 = 74.1670 roubles)