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New investment fund to be used for major projects

MOSCOW, July 21 (RIA Novosti) - Conditions will be set for the new Russian investment fund, Russian Deputy Economic Development and Trade Minister Andrei Sharonov told the Russian newspaper, Izvestiya.

Sharonov said the fund must only invest in major joint private-public sector projects requiring a total investment of at least five billion rubles (almost $175 million).

In addition, Sharonov said that the investment fund was not supposed to finance highly profitable projects, because they should be funded by the commercial sector. "At the same time, the investment fund will not finance loss-making projects. They will be funded through federal target programs and federal target investment programs," the deputy minister said.

A governmental budgetary commission decided to set up the investment fund in mid-April.

Economic Development and Trade Minister German Gref said it had been decided that about $2.1 billion would be allocated for the investment fund in 2006, as a result of the raised oil cut-off price for the stabilization fund and early foreign debt repayments.

The government has decided that the oil cut-off price, which is currently $20, will be put up to $27 on January 1, 2006.

While $2.1 billion is the minimum amount the fund will operate with, full-scale funding of major national projects will require up to $3.5 billion. Money from the investment fund will be used for large infrastructure projects, such as building roads, and airports.

Russian Minister of Finance Alexei Kudrin backed the creation of the investment fund. However, he said its objectives must be very well defined so as to improve the effectiveness of spending.

Gref said Wednesday that the investment fund could hold around $2.5 billion by 2006. Documents setting up the fund are currently being agreed.

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