Russia overstated its capital outflow figures

What's Down: Russian capital outflows were half the amount reported by the central bank last year, according to a study.

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Russian capital outflows were half the amount reported by the central bank last year, according to a study by Ernst & Young, the Russian Direct Investment Fund and Moscow State University's Intelligent Reserve Centre.

Only US$40.5 billion (Dh148.77bn) of the $80.5bn of net outflows recorded last year was genuine, according to a report released yesterday.

More than $10bn was mergers and acquisitions by Russian companies, $9.9bn was "errors and omissions" by the regulator, as much as $9bn was investment through offshore jurisdictions, $6bn was Russian banking subsidiaries supporting their parent companies and $6bn was spent on aircraft registered abroad, the researchers said.

Capital outflow from the world's largest energy exporter has reached $363bn since 2007, the last full year of net inflows, central bank data shows. In his first state-of-the-nation address since returning to the presidency in May, Vladimir Putin last week urged policymakers to proceed with legislation to repatriate capital held by companies and high-ranking officials abroad.

Outflows will reach as much as $65bn this year, Anton Siluanov, the finance minister, said on Wednesday. The ruble has gained 4.4 per cent against the dollar this year, data compiled by Bloomberg show. The researchers said their findings were comparable to World Bank data, which put last year's outflows at $32.3bn, based on private capital flows from direct and portfolio investment. Outflows were $10.9bn in 2010, compared with the official $34.4bn estimate, $9.3bn instead of $56.1bn in 2009 and $16bn rather than $133.7bn in 2008, according to the World Bank.

Capital outflows from Russia were equal to almost 5 per cent of GDP last year, compared with almost 20 per cent in Norway and 35 per cent in Kuwait, according to yesterday's study.

There is no statistical relationship between capital flows and indicators of the investment climate, the researchers said.

* Bloomberg News