Experts revise Russian Central Bank’s estimates on capital outflow

Today’s edition of publishes expert opinions on the actual volume of capital outflow from Russia that differ from the official estimates by the Russian Central Bank. The main objection of the study developed by the government-owned Russian Direct Investment Fund, Ernst & Young and the Moscow State University consists in the fact that the Central Bank’s methodology does not take into account the nature of transactions underlying the capital outflow. According to the authors of the study, it would be more appropriate to use the World Bank methodology for calculating the capital outflow, which shows a significantly lower respective figure for 2011 – USD 32.3 billion, versus the Russian Central Bank’s official figure of USD 80.5 billion. 

The study claims that the methodology used by the Russian Central Bank to calculate the capital outflow is not used in any other leading or developing economy in the world. Listing particular objections to the Russian Central Bank’s methodology, the study states that the use of aircrafts registered in foreign jurisdictions by Russian air carriers should be presented as foreign direct investment; Russian companies’ international M&A activity should not be viewed as capital outflow, but as international expansion of their business. The study also claims that most of the monies invested abroad in the form of foreign investments return to Russia in the near term – in the period from 2007-2011, offshore jurisdictions received USD 135.6 billion from Russia, while they invested USD 133 billion into the country. 

The tone of the study then turns defensive, indicating that there is no statistical correlation between the Russian business climate index and the capital outflow and that the capital outflow in Russia is comparable to that of other large export-oriented economies (Norway, Kuwait and Japan). The study also makes a case that the capital outflow from the country is in direct correlation with international, rather than domestic, economic developments. daily reports on a related issue of money laundering schemes within the customs union (Belarus, Kazakhstan, Russian Federation) that add to the capital outflow from Russia. Experts estimate that fictitious export transactions from Belarus alone amounted to tens of billions of U.S. dollars in 2010 and prompted the Russian Central Bank to strengthen the regulation relating to remittances to Kazakhstan and Belarus. The Central Bank is suspicious of the authenticity of import documents and believes that such fictitious transactions are used by Russian residents to avoid taxes or launder illegally obtained funds. Having regulated the respective transactions with Belarus, the Central Bank is turning its focus towards Kazakhstan. However, it will be more difficult to check the authenticity of import deals from Kazakhstan, as its Central Bank does not have a centralized database of respective bills of lading, the sole document accompanying transactions of goods within the customs union. This predicament will probably motivate the banks to avoid performing such transactions altogether in order to avoid trouble with the Central Bank, at least until the three member states develop a unified database of export documentation.     


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