Outflow of Capital in the 1st Quarter May Amount to About $65bn

In the present-day conditions, if sanctions against Russia eliminate an opportunity for Russian borrowers to take new loans even a short-term period during which such sanctions are in force will deal a serious blow to the balance of capital flows.

The thing is that the non-public sector accounts for a larger portion of the Russian foreign debt (according to the data as of January 1, 2014 $653bn out of $732bn of Russia's total foreign debt). About $150bn worth of external loans of the non-public sector, that is, a quarter of the entire debt is to be repaid in 2014. It is to be noted that the termed pattern of the foreign debts is such that a larger part of it is short-termed and repaid within a quarter. So, in the 1st quarter of 2014 banks have to repay creditors about $16bn–$18bn, while non-banking corporations, about $40bn.

With both normal functioning of global financial markets and Russian borrowers experiencing no problems in receiving new loans, that short-term debt is constantly refinanced. So, 30%–40% of banks' foreign debts and 20%–30% of non-banking corporations' debts are to be repaid during the next quarter. Generally, it takes place by means of attraction of new loans and the total volume of the debt keeps growing.

In case of volatility on foreign markets and Russian borrowers' problems to receive new loans, difficulties in refinancing of those short-term debts may be first to arise.
A failure to attract new foreign debts within the 1st quarter may result in growth of $50bn to $55bn in the net capital outflow (according to our estimates, in the 1st quarter of 2014 capital outflow may amount to $60bn-$65bn), while within a year, in growth of $140bn-$150bn. The debts can be partially repaid by means of liquid foreign assets of Russian borrowers. However, in that case with no access to new loans the net capital outflow from Russia within a year may exceed $100bn.

Mikhail Khromov, Leading Expert of the Structural Research Center