Offshore waiting for: the outflow of capital from Russia has intensified

12

Офшоры ждут: отток капитала из России усилился

The Bank of Russia estimates, the net capital outflow in the past year to $29 billion, said at a press conference the head of the Central Bank Elvira Nabiullina. Earlier, the Central Bank said about $17 billion, which will be withdrawn from the country. In other words, the Central Bank is mistaken in its predictions for the outflow of capital by 12 billion

For the previous 11 months the outflow of capital increased by 3.4 times — up to $28 billion from $8.2 billion in the same period last year.

During a press conference Nabiulina also acknowledged that he will have to revise our estimate of net capital outflows in 2018. Of course, upward: $10 to $16 billion.

In the fall, the Central Bank still showed optimism about the movement of capital. Due to the rising cost of a barrel and collective efforts of OPEC member countries and some of those are not included in the cartel. The price of oil for a few months then grew by almost 40% and for the first time in the last two years has exceeded $60 per barrel. It is possible to increase the export earnings of Russia in the third quarter on a third.

In September, the Bank of Russia has lowered the forecast on the amount of net capital outflow from Russia in 2017 to $17 billion, but with the onset of cold weather, the optimism from the Central Bank was gone.

No guessing with the outflow and economic development. The forecast of the Ministry Maxim Oreshkin for 2017 — $18 billion — is also not justified. According to the Minister, the divergence of reality and Outlook in the first place occurred “because of the stronger current account due to higher oil prices”.

A larger than expected inflow of foreign currency into the country allowed the Ministry of Finance to accumulate it.

“Lower oil prices, would be below the outflow,” — said the head of Ministry of Economics.

The actual outflow in the next year could exceed the forecast of the Ministry of economy $7 billion.

“The outflow of capital in 2018, with higher oil prices than envisaged in the current forecast, can be more”,— said Oreshkin. Another review of the forecast will be in February, after will be known data on GDP for 2017.

Presenting the revised forecast, Nabiullina also said that the outflow of capital cannot be identified with the flight of investors from Russia or illicit withdrawal of funds. The Central Bank believes that the outflow of capital is most affected banks that dampen external debts and are in need of foreign currency. For example, in October payments on foreign debts amounted to 4.6 billion, and one third of this amount accounted for the largest banks.

“Net capital outflow in the published balance of payments cannot be identified with the illegal export or capital flight,” — said Nabiullina.

According to her, any country with a positive current account balance of the balance of payments in an open economy exports capital either through the growth of government foreign currency reserves, or through the private sector, so capital outflow is not necessarily a bad thing. “And the inflow is not always good for the economy”, — said Nabiullina.

HSE experts have earlier pointed out that from the beginning to the conclusion of capital involved not only banks, but also of the company.

The corporate sector in the third quarter brought the country $14 billion, which was a record for recent years.

In contrast, the Central Bank experts are of growing disturbing trends in the economy of Russia, which just shows the current trend of capital outflows. Even with the growth of budget revenues, due to increased in the price of the barrel and the resumption of economic growth, the business is not in a hurry to invest. “Capital outflow was almost no from the second half of 2016, when the economy “started from the bottom” — said the expert of the “center of development” HSE Mykola Kondrashov.

Net capital inflow in Russia turned negative in 2008. Before that in 2006 there was an influx of nearly 44 billion, in 2007 this influx has doubled, reaching 88 billion.

In 2008, everything collapsed – the outflow has reached the first record, minus $133.7 billion. Later the outflow was reduced.

For example, in 2012, it was 54.6 billion in 2013, the most favorable year before the events in Ukraine and in the Crimea, before the introduction of Western sanctions, the outflow amounted to 61 billion.

At the end of 2014 – the first year of sanctions and retaliatory Russian embargo – the outflow went back on the record minus 154 billion.

Thus, according to the head of the Central Bank Sergey Ignatyev earlier, the outflow of capital was caused including conducting dubious operations. For example, in 2012, the outflow amounted to $56.8 billion, of which the category of “dubious operations” of the Central Bank then took $35.1 billion. More than half of the doubtful operations on withdrawal of capital from Russia can control one group of individuals, said Ignatieff in an interview.

“It could be a charge of drug supply (…), grey import (…), bribes and kickbacks to officials (…), managers, carrying out purchases at large private companies. Maybe it is the scheme of tax evasion,” — said Ignatieff.

In recent years, the criminal component of capital outflows are not as significant, but now the Western investment funds and banks are pulling money out of Russia.

Banks are afraid of new sanctions by the US and the EU, which may not be allowed to invest in Russian debt.

The threat of new sanctions associated with the prohibition of purchases of Russian debt, can actually lead to the exit of investors from the BFL, said the Deputy Director of the Center for development HSE Valery Mironov.

“Foreign investors may begin to sell securities. They keep the amount of nearly 30 billion in Federal loan (about a third of the OFZ) and, accordingly, they will dump these securities, convert into dollars and take this capital,” suggests Mironov. According to him, this problem may worsen after the New year.

The ex-head of the Central Bank Sergey Dubinin sees no reason for concern. Even three years ago, when the figure of the outflow rose to $150 billion, the country still endured it. “Therefore, this factor of the outflow is not a priority or in some significantly meaningful” soothes the Dubinin.

LEAVE A REPLY

Please enter your comment!
Please enter your name here