Capital Outflow From Russia Will Save Economy From Overheat – Moiseyev

TOKYO. Oct 12 (Interfax) – The capital outflow to which Russia has fallen victim over the last several months will protect the country’s economy from a possible overheat, Russian Deputy Finance Minister Alexei Moiseyev said in conversation with the press on the sidelines of the annual meeting of the International Monetary Fund (IMF) and the World Bank in Tokyo.

“My personal feeling is that capital outflow is a topic that is somewhat incorrectly regarded in the majority of publications. It is considered in isolation from everything else,” Moiseyev said.

“Capital outflow is a balancing flow that rids the economy of liquidity that the economy can’t digest,” he said.

Negative assessments of capital outflow are a product of it being considered separately from the state of the economy as a whole. “What’s bad in that? The fact that money is leaving, in a separately taken context. But if you look at the entire context, you will see that in the current state of the Russian economy’s development, there would be an overheat if this money didn’t leave,” Moiseyev said.

He added that “capital outflow, first and foremost, is a Russian investor phenomenon.”

“That is primarily Russian companies in the non-financial sector. They make money and leave the cash they earn overseas,” he said.

At the same time, there are substantial inflows of foreign investments. “The level of foreign direct investment last year was the highest since 2007. Foreign investments are very high for us in comparison with historic levels,” Moiseyev said.

Therefore, in order to reverse the situation with outflows, Russia needs to implement the presidential decree, issued in May, aimed at improving the investment climate by bringing Russia to 20th place in the World Bank’s Doing Business rating. “Eventually, once we have a different investment climate, once the government handles all of the tasks put before it, then Russian companies will also have the desire to leave their capital in the country,” Moiseyev said.