Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Kudrin Says High Oil Prices Cause Russia’s Capital Flight

Capital flight from Russia, the world’s largest energy exporter, is caused in part by high oil prices, Finance Minister Alexei Kudrin said.

“The first reason for our outflows is the high price of oil,” Kudrin told reporters late yesterday in Washington. Companies can’t “reliably invest” all their earnings on the domestic market.

Russia’s economy slowed in the first half of the year even as Urals crude, the country’s main export blend, advanced 19 percent. Net private capital outflows over the period reached $31.2 billion, according to preliminary central bank data. Most of the cash leaving Russia is “hot money” from speculators, Deputy Finance Minister Sergei Storchak said Sept. 22.

Total net private capital outflows this year may top $35 billion “if there’s even more of a crisis situation,” Kudrin said. After oil, the next leading cause is the shrinking current account balance, which leads to expectations that the ruble will weaken, Kudrin said. That, in turn, pushes investors to dump assets priced in the Russian currency, he said.

“I’d only put in third place the overall risks, including political risks, that exist until the elections pass and new policy is determined,” he said.

Putin Candidacy

Prime Minister Vladimir Putin today told the ruling United Russia he’ll run for president again in March, ending speculation over whether his protégé, President Dmitry Medvedev, would seek a second term. The news may be taken “negatively” by international investors when the markets open again on Monday, Ivan Tchakarov, the Moscow-based chief economist at Renaissance Capital, said by phone today.

“The market will be initially disappointed -- there’s a very simplified view that Medvedev represents reform and Putin conservatism,” Roland Nash, chief investment strategist at Moscow-based hedge fund Verno Capital, said by phone. “After the initial disappointment, though, the market will focus on the fact that we’re going to see at least six years, if not 12, of political stability, and a more liberal prime minister.”

Oil Prices

Kudrin said he stood by his forecast last year that oil may fall to $60 a barrel within the next three years. Crude may still drop to that level for a period within the next one-and-a-half to two years, he said.

“It was exactly the risks that we have now that I had in mind,” Kudrin said. “The economic model that created these imbalances haven’t changed. Fundamentally, they weren’t resolved by the crisis.”

The government is standing by its plan to sell off state assets and is waiting for better market conditions, Kudrin said.

“We don’t have any fundamental changes,” he said. “We’re waiting for better markets, so apparently some assets will be sold later.”

Bank Rossii, which holds a controlling stake in OAO Sberbank, Russia’s largest lender, must decide for itself whether to delay a stake sale planned for 2011, Kudrin said.

“As far as I know, we’re waiting on the market,” he said. The sales will be “a bit less than we planned for this year. Next year is still all in place.”

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.