Capital Outflow Hits $46.5 Bln in Jan-May – Central Bank

Net private capital outflow from Russia amounted to an estimated $5.8 billion in May and $46.5 billion in the first five months of this year, Central Bank Chairman Sergei Ignatyev said on Wednesday.

Capital flight from Russia stood at $15.2 billion in January, $11.3 billion in February, $7 billion in March and $7.3 billion in April, the chief banker said.

The Central Bank head declined to forecast whether Russia would register a net capital inflow or outflow this year, but Ignatyev did not rule out capital inflow into Russia during the remainder of 2012.

“We can expect capital inflows but much will depend on developments outside the country,” he said, adding he meant the slowing of economic growth in China and developments in Europe.

Ignatyev said banking sector liquidity could deteriorate due to the crisis developments in Europe.

“Unpleasant scenarios in Europe are possible, although unlikely, and banks must prepare for this because the liquidity situation may deteriorate,” Ignatyev said.

The ruble’s weakening against the dollar/euro bi-currency basket by one percent may push up inflation by 0.1-0.2 percentage points within six to twelve months, Ignatyev added.

“There is the so-called carryover effect – this is how much the level of prices changes in the wake of changes in the foreign exchange rate. According to some calculations, with the increase of the cost of the bi-currency basket by one percent, the price level is to rise by 0.1-0.2 percentage points but this effect is spread in time – over six to twelve months,” he said.

The Central Bank is going to stick with plans to sell its 7.6 percent share of Russia’s largest retail savings bank, Sberbank, this year Ignatyev added, but said it would not do so in unfavorable market conditions.

“As for privatization of Sberbank, we are not giving up our plans to sell a part of our stake this year but at current prices it is bad to sell it,” he said.


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