Putin: Capital Outflow Is Russian Business Expansion Abroad

MOSCOW, December 27 (RIA Novosti) ­ Officially registered capital outflow from Russia frequently reflects Russian business investment abroad, President Vladimir Putin said on Thursday.

“As for capital outflow, this process is not viewed as simplistically as is frequently talked about. Capital outflow in our conditions does not mean direct capital flight,” he said.

A substantial part of this capital is registered in statistics during Russian business investments abroad, he said, citing the example of Russia’s largest lender Sberbank as an example.

“Sberbank acquired two large financial institutions this year ­ one in Eastern Europe [Volksbank] and the other in Turkey [Denizbank]. This also is included in the capital outflow figure but this is not capital flight, this is expansion into external markets,” Putin said, adding many companies in the world also relied on these practices.

Capital flight from Russia peaked at $133.7 billion in 2008 when the global economic crisis broke out, falling to $56.1 billion in 2009. Capital outflow from Russia stood at $80.5 billion in 2011 compared with $34.4 billion in 2010.

Russia’s Economics Ministry expects capital flight at $73-75 billion in 2012 compared with the Central Bank’s estimate of $65-67 billion. Central Bank chief Sergei Ignatyev has said the regulator does not plan to give up its capital outflow calculation methods because they are appropriate for the Bank’s analytical work.