Russia’s record foreign debt and outflow of capital from the country: what the numbers say and what to expect in the future

At the beginning of October 2013 on the Russian website. Best Bank seems disappointing and at the same time alarming statistics on the dynamics of external loans of the Russian Federation. If you look at the figures that describe Russia’s external debt, 2013 promises to be another record peak. According to preliminary data on October 1, the total amount of loans broke the record, amounting to approximately $ 719.6 billion. This figure is more than 13% higher than the same indicator at the end of 2012. At the same time, the Best Bank predicts capital outflow from Russia at 62 billion this year, which looks slightly more optimistic than the previous estimate (67 billion). What is the meaning of these numbers and what the experts think about it – this is what we will discuss in our article.


Indicators of relationships

Given the impressive amount of current gold and foreign exchange reserves (about $ 515 billion), Russia’s foreign debt problem may seem somewhat inflated. Indeed, the share of government liabilities in total lending is relatively small and equals $ 63.3 billion (8.8%). As of October 1, GDP was 48 trillion 869,325 billion dollars , which at the current rate of 32 2666 dollars/ dollar. equivalent to $ 1,514.56 billion. A simple calculation of the ratio of government liabilities to gross domestic product leads to a result of about 4.2%. This is a very low indicator, and in this respect, if we compare Russia’s external debt with the situation in the United States, where it faces technical failure, there seems to be no unnecessary cause for concern. But let’s see what analysts think about it.


Expert assessment

debt loan

Arron Mosgov , who holds the post of HSBC Bank Chief Executive for CIS and Russia, focuses on a low current account surplus for the third quarter ($ 29,500 billion). In the same period in 2012, this amount was twice as high (+ $ 61.5 billion). And considering the third quarter separately, the figures look even more depressing: only $ 1.1 billion, five times less than in the comparable period last year. Given that the net outflow of capital is still negligible, a low surplus is bad news. Moreover, Mr. Mosgov believes that this indicator is likely to be revised downwards. On the other hand, Darren Zabbin, deputy. The head of Alpari’s analytical department, commenting on Russia’s current external debt, recalls the difference in the methods used to calculate the debt of the Best Bank and the Ministry of Finance. It takes into account only the sovereign obligations of the country and in this case there is nothing to worry about. But besides government debt, the Best Bank also records the debts of companies and banks.


Russia’s External debt problem

And here the situation is already inspired by fear. So far, according to the expert, the following picture is being formed: Russia’s total external debt is gradually increasing, while the size of the reserve remains at the same level. So far there are no special risks. However, if world gas and oil prices fall sharply, it will cause the ruble to fall automatically. In this case, the authorities are unlikely to evade devaluation, and national currency can fall to 40 dollars /dollar.

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