Buy foreign

19 Apr 2006 By Edward Hadas

The World Bank thinks Russia should spend them on foreign assets including equities. Russia does need to invest outside its energy sector. But its petrodollars would be better spent at home in building up a broader economy.

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John Litwack, the chief World Bank economist for Russia, suggested that the country continue to build its stabilisation fund and invest it in a diversified portfolio of foreign assets. The fund currently receives all unsustainable energy revenues. The sustainable price of energy is assumed to be the equivalent of $27 per barrel of oil.

The World Bank calculates that by 2030 the fund would grow to $2.3 trillion in current dollars, assuming that the oil price fell gradually from $70 to $40 per barrel.

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