Capital outflow from Russia decreases almost threefold

According to a statement by the Bank of Russia, the net capital outflow in 2015 from Russia amounted to $56.9 billion compared with $153 billion in 2014. 

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Capital outflows from Russia declined significantly due to the devaluation of the ruble, said Alexander Grichenkov, an analyst with MFX Broker. At the moment it’s not profitable for companies to withdraw money abroad, even in offshore jurisdictions. With the current instability of exchange rates it’s considered much safer to put this money into Russian assets, which can earn up to 15 percent per annum in risk free investments, while inflation expectations for the coming years has decreased significantly.

Regarding the existing outflow structure, then first of all it is based on payments by companies to service external debts, which dropped by more than $60 billion over the past year. Grichenkov also notes that part of the money was taken out by financial companies (primarily foreign ones) following “carry trade” operations, which became very profitable for the Russian financial market. So, some part of this outflow is included in operations on the credit market in rubles. About 20 percent of the outflow in 2015 was due to operations in the credit market - about $10-11 billion. Additionally, many subsidiaries of foreign financial organizations are still operating in Russia, so they are often included in contributing to the outflow of capital.

First published in Russian in Expert.

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