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5.2.3 Capital flight dynamics
The net outflow of private sector capital from Russia in 2018 was up by 2.7 times over the previous year to $67.5bn, the Central Bank of Russia (CBR) said on January 16.
Part of the outflow was caused by Russian banks paying down debt as the process of deleveraging continues that started after the 2008 crisis and again after the 2014 devaluation.
At the same time banks’ foreign assets increased funded by Russia’s rising export earnings and positive current account balance that reached a record $113bn at the end of 2018. Banks were also accumulating reserves of foreign currency in accounts, which was facilitated by the CBR decision to suspend FX purchase on the open market last August and which only resumed this week.
The regulator highlighted that the capital outflow was not classic capital fight as, in contrast to the situation of 2016-2017, the growth of net lending to the
59 RUSSIA Country Report February 2019 www.intellinews.com
