Page 53 - RusRPTMar19

and –$2.3bn, respectively. For the banking sector, this is the 19th consecutive quarter that external debt has contracted, which started in 3Q14.
For the corporate sector, the decline in external debt only restarted in 2H18, and in this sense it is a reversal of the trend of 2017. In 4Q17, the corporate sector attracted around $2bn on a net basis.
Capital outflow reached $67.5bn from the private sector and almost $7bn from the public sector. Apart from this, the CBR bought $36.1bn worth of FX from the market before these purchases were suspended in August.
In the fourth quarter of 2018, net capital outflow from the private sector reached $36.5bn, exceeding the figure for the whole of 2017 ($25.2bn).
Importantly, net foreign debt redemptions stood at $10.4bn, so the majority of the capital outflow in the fourth quarter of 2018 ($26.1bn) was attributable to an increase in foreign assets.
It appears that once the CBR halted its FX acquisitions, residents took the opportunity to accumulate FX liquidity for FX debt redemptions in the future.
VTB Capital (VTBC) argues that now the Central Bank of Russia (CBR) is back in the FZ market capital outflow should drop significantly in 2019 this year.
According to the preliminary figures (which are subject to revision once the CBR has received all the data for December), portfolio investments in Russian sovereign bonds fell by just $0.6bn in 2018.
5.2.3 Capital flight dynamics
The net export of capital from Russia by the private sector in January reached $10.4bn, which is almost 1.5 times higher than the figure for the same period last year, according to the Central Bank of Russia (CBR) Vedomosti reported on February 11.
This amount is already half of all the capital flight that the CBR is predicting for the full year under its basic scenario.
In January 2018, the amount of capital flight was $7.1bn. According to preliminary estimates by the Central Bank, the current account surplus of Russia's balance of payments this January was $11.8bn, which is $1.1bn less
53 RUSSIA Country Report March 2019 www.intellinews.com