Russia’s record external debt and capital outflows from the country: what the numbers say and what to expect

In early October 2013, disappointing and at the same time alarming statistics appeared on the website of the Russian Central Bank regarding the dynamics of foreign borrowing of the Russian Federation. If you look at the figures that describe the state of Russia's external debt, 2013 promises to be another record high. According to preliminary data, on October 1, the total amount of borrowing broke the record and amounted to approximately $ 719.6 billion. This value is more than 13% higher than the same indicator at the end of 2012. At the same time, the Central Bank predicts capital outflow from Russia this year at 62 billion, which looks a bit more optimistic compared to the previous estimate (67 billion). What is the meaning of these figures and what experts think about this - this is exactly what and will be discussed in our article.

external debt of Russia

Relationship indicators

If we take into account the impressive amount of current gold and foreign exchange reserves (about $ 515 billion), it may seem that the problem of Russia's external debt is somewhat bloated. Indeed, the share of government obligations in the total amount of borrowings is relatively small and is equal to $ 63.3 billion (8.8%). As of October 1, GDP amounted to 48 trillion 869.325 billion rubles, which at the current rate of 32.2663 rubles / dollar. corresponds to $ 1,514.56 billion. A simple calculation of the ratio of state obligations to gross domestic product leads to a result of about 4.2%. This is a very low indicator, and from this point of view, if we compare the external debt of Russia with the situation in the United States, where the country faces a technical default, there seems to be no unnecessary cause for concern. However, let's see what analysts think about this.

external debt of Russia 2013

Expert Score

Alexander Morozov, who holds the post of chief economist at HSBC Bank for the CIS countries and Russia, focuses on the low surplus of the current trading account for the third quarter ($ 29.500 billion). For the same period in 2012, this figure was twice as high (+61.500 billion dollars). And if we consider the third quarter separately, the figures look even more depressing: only $ 1.1 billion, which is five times less than in the comparable period last year. Given that net capital outflows are still negligible, a low surplus is bad news. Moreover, A. Morozov believes that this indicator is likely to be revised downward. In turn, Daria Zhelannova, deputy. Director of the Alpari Analytical Department, commenting on the current external debt of Russia, recalls the difference in the methods for calculating the debt of the Central Bank and the Ministry of Finance. The latter takes into account only the sovereign obligations of the country, and in this case there is nothing to worry about. But the Central Bank, in addition to government debt, also captures the debts of corporations and banks.

the problem of the external debt of Russia
And here the situation is already beginning to inspire concern. So far, according to the expert, the following picture is taking shape: the total external debt of Russia is gradually growing, while the size of the reserve remains at the same level. So far, there are no particular risks. However, if world prices for gas and oil fall sharply, this will cause the ruble to fall automatically. In this case, the authorities are unlikely to avoid devaluation, and nat. the currency may well drop to 40 rubles / dollar.


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