Capital Flight From Russia Expected to Reach $70-80B

File Photo of Cash, Coins, Line Graph

MOSCOW, April 21 (RIA Novosti) – The Russian Finance Ministry has forecast this year’s capital outflow from Russia as reaching $70-80 billion, the director of long-term planning at the ministry said Monday.

“We are certain that it won’t jump to $100 billion this year. A more reasonable estimate would be around $70-80 billion,” Maxim Oreshkin said.

“The prognosis we have on our hands doesn’t reflect the current account and capital flight dynamics, we think,” he added.

The Finance Ministry in its forecasts seemed more optimistic than the Economic Development Ministry, whi ch predicted a capital outflow from Russia up to $100 billion this year.

The Russian finance official said that the structure of capital outflow recalled the situation facing Russia during the fourth quarter of 2008, characterized by a bigger foreign currencies ratio and an uptake in foreign assets within the banking system as companies and individuals converted money to foreign currencies.

These occurrences are isolated and are often reversed in subsequent quarters.

“We don’t expect the [outflow] figures of the first quarter to repeat themselves in the nearest quarters, and we think that the figures for the year would fall significantly short of 100 [billion dollars],” the Russian Foreign Ministry said in its statement.

“As for the current balance, the decreasing trend that we’ve been witnessing for the past couple of years is believed to have changed. Now the situation around the current payment balance is gradually improving. A weaker ru ble and a higher interest rate will see this trend through the upcoming quarter,” Oreshkin said.

The Foreign Ministry expects the surplus to exceed $50 billion at the end of 2014, compared to estimates last year by the Central Bank of $33 billion.

Russia’s Deputy Prime Minister Igor Shuvalov said earlier the capital outflow from Russia was a result of fluctuations in the exchange rate of the ruble in regard to the main reserve currencies and had little to do with the situation in Ukraine.

Mass exchange transactions from rubles to dollars and euros were brought on by the sharp fall of the Russian currency against the backdrop of an overall investment outflow from developing markets, Shuvalov said, adding there is an ongoing reversal of the trend.