Oil revenues could be invested in foreign bonds, stock - Gref

"I believe the range of instruments should be broadened, but in a conservative way."

CANNES (France) - March 14 (RIA Novosti) - Russia's economics minister said Tuesday the country's oil revenues could be invested in other countries' national bonds and foreign stock, although with caution.

Commenting on a proposal made by Mikhail Kopeikin, head of the government's economic and property management office, German Gref said: "I believe the range of instruments should be broadened, but in a conservative way."

Speaking about the Stabilization Fund, established to accumulate Russia's windfall oil revenues, Gref said that profitability was not the main factor in investing fund money, adding that security and quick convertibility, or liquidity were more important. He also said that combining profitability and the latter factors was difficult.

Kopeikin suggested Monday dividing the Stabilization Fund money into two, with one part be invested in foreign bonds and currencies and the other in foreign stock.

He said over 66% of oil revenues could be invested in foreign bonds and currencies, and the share could be gradually increased if the investment option proved successful.

The remaining third could be placed in the shares of hundreds of reliable foreign companies in different countries and involved in businesses without links to the oil industry. The official said this would help diversify the investment package and ensure its security. These must be long-term investment options, which would help bring down risks, according to Kopeikin.

A respected Russian business daily quoted Kopeikin Monday as saying that investment in foreign stock could bring Russia around $2 billion in 2006 alone.

According to Kommersant, Russian Finance Minister Alexei Kudrin opposes the move, which would move Stabilization Fund money out of its control.

On Monday, the Finance Ministry said the Stabilization Fund had grown to 1,562.7 billion rubles ($55.7 billion) as of March 1, reporting a month-on-month growth of 6.6%.

Deputy Prime Minister Alexander Zhukov, speaking Sunday at the fifth session of the Russian Economic and Financial Forum in Switzerland, said the government expected the fund to exceed $70 billion at the start of 2007 and $107 billion at the start of 2008.

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