MOSCOW (Reuters) – Russia will spend around 2.5 trillion roubles ($34 billion) from its National Wealth Fund (NWF) in the next three years to help revive economic growth after the pandemic but must also take care not to drive up inflation, officials said on Tuesday.

The amount represents an increase from 1.6 trillion roubles agreed only this month by the government and central bank, with the extra cash earmarked for the Ust-Luga liquefied natural gas and gas-to-chemicals complex, a project involving Gazprom.

The spending plan is strongly supported by the ruling United Russia Party, which backs President Vladimir Putin and which won nearly 50% of votes in a Sept 17-19 parliamentary election that opponents say was marred by mass fraud.

The government hopes the huge spending plans will translate robust growth in the leadup to a presidential election in 2024, the year the plan ends, without also fuelling inflation, which has been eating into Russians’ living standards.

“The government is looking for sources of growth and the NWF which is pulling in private investments is not a bad tool. The key thing is for this not to impact inflation, for the central bank’s rates not to rise,” Finance Minister Anton Siluanov said.

Earlier on Tuesday, the economy ministry raised its year-end inflation forecast to 5.8% from 5%, which is still above the central bank’s target of 4%.

Russia has seen five key rate hikes this year as the central bank tries to curb price growth.

RISKS

The central bank has warned of inflationary risks if the NWF, a cushion for Russia’s oil revenues and which totalled $190.5 billion as of Sept. 1, is spent too freely.

The additional 900 billion roubles agreed for the spending plan will be used to buy foreign equipment and therefore should have no impact on monetary policy, Siluanov said.

The central bank’s rate hikes have already knocked 0.2 percentage points off Russia’s forecast for 2022 economic growth, which is now seen at 3%, the economy ministry said separately on Tuesday.

To make the budgetary spending more balanced, Russia will already distribute 900 billion roubles, initially set for 2023-24, this year, Siluanov said, including by providing the development corporation VEB with 190 billion roubles.

The central bank has said it may continue further rate hikes at its next board meetings. While warning of the risks the rate hikes may pose, the economy ministry raised this year’s GDP growth forecast to 4.2% from a July estimate of 3.8%.

Russia is already running a budget surplus this year, set to continue in 2022-23 and supported by newly announced taxes on metals, coal and fertiliser producers. It is expected to return to a deficit in 2024, the presidential election year.

($1 = 72.9891 roubles)

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