Page 47 - RUSRptOct18

5.2.3 Capital flight dynamics
The Bank of Russia forecasts in 2018 the outflow of capital from Russia at $19bn against the previously expected $ 16bn, said at a press conference, Central Bank Chairman Elvira Nabiullina.The forecast of the current account balance in 2018 increased from $ 43bn to $ 59bn, the forecast of foreign exchange reserves - from $ 35bn to $ 50bn.
Net capital outflow from Russia in January-August 2018 jumped 2.8-fold year-on-year to $26.5bn, according to the data from the Central Bank of Russia (CBR). In August alone net capital outflow amounted to $5bn, as compared to July's data. Previously, due to the worsening external environment and higher sanction risks, the CRB increased its net capital outflow forecast for 2018 from $16bn to $30bn, at an average oil price forecast of $67 per barrel. The Ministry of Economic Development recently downgraded its outlook on capital outflow from $18bn to $41bn. In 2017 net capital outflow increased 1.6-fold to $31.3bn. Notably, while state external debt remained stable at $485.6bn, foreign investors pulled $32.6bn from OFZ federal bonds in January-August, cutting the share in external debt to 6.3%, according to the CBR data. In January-August Fx/gold reserves of the CBR increased by $36.bn year-to-date to $460.6bn, mostly on the back of Fx purchases for the finance ministry from extra oil and gas revenues. In the end of August the regulator had to halt the purchases of foreign currency on the domestic market due to ruble volatility.
Since 1994, when the Central Bank of Russia (CBR) started publishing capital flight data, a total of $581bn has left Russia as private sector outflows.
But what makes the eyes water is in the last decade and half there were only two years, 2006 and 2007, when there was a net inflow of capital. Those were height of Russia’s boom years when Russian businessmen finally became optimistic about the future of the country: the $131bn that came home in those two years was only slightly less than the total of all the money that had left in the preceding decade, or $156bn.
If the US crash had not started a global panic, if Russia had had a few more years of this level of inflows, then it is likely the changes would have gathered enough momentum to transform the country and bring it up to par with the developed world.
But the US did crash. Russia didn't have very long in the sun. In 2008 a massive $133bn left – the same amount as all the money that had arrived in the previous golden years – and not only did the optimism evaporate, but one can imagine that those Russian investors foolhardy enough to bring their cash home have been scarred for life. In the following years between 2009 and up to the second quarter of this year a total of $539bn has left the country, which includes an eye watering spike that was even bigger than the 2008 crash of $152bn that fled in 2014 following Russia’s annexation of the Crimea that year. Capital flight has petered off in the last two years, but some $20bn is still leaving every year.
47 RUSSIA Country Report October 2018 www.intellinews.com