Foreign investors who have left Russia in the past 15 months have taken about $36 billion out of the country under Vladimir Putin, according to data released by Moscow’s Central Bank on Monday, Reuters and Agerpres reported.
Dozens of world-class companies have either left or reduced their operations in Russia in response to Moscow’s invasion of Ukraine in February 2022.
Last week, the Central Bank of Russia downplayed the impact of foreign companies leaving, saying that from March 2022 to March 2023, approximately 200 sales contracts were concluded, and only 20% involved large asset sales, namely those exceeding $100 million.
“Based on the 80/20 Pareto rule assumption regarding the size of assets, we can estimate the amount of capital withdrawn by foreign investors from Russia at $36 billion,” said Maksym Osadchii, director of analysis at BKF Bank.
The authorities in Moscow tried to stop the outflow of foreign companies, first with the help of a moratorium until the end of 2022 on the control of business entities, and then with the help of punitive measures.
Russia is trying to patch up the budget after the departure of foreign investors
Currently, the Russian Ministry of Finance, the body that must approve the sale of any foreign company to Russian entities, requires foreign investors to sell their businesses at a 50% discount.
But the Russian authorities are also analyzing other measures in this regard, given that due to the war in Ukraine, the country’s budget deficit has grown rapidly.
The federal budget of Russia in January-April had a deficit of 3,400 billion rubles (40.6 billion euros), which for the first quarter exceeds the forecast for the entire year 2023.
Andriy Nechaev, Russia’s first economy minister since the collapse of the Soviet Union, recently said that the finances of the country now led by Vladimir Putin have gone “to shit,” but that’s not really the biggest concern.
“[Problema] The point is not that we are in shit, but that we decided to sleep in it,” said Nechaev at a forum on financial topics organized in early May.
Russia’s former economy minister said Moscow has enough reserves to cover the deficit for a year, but after that it will have to borrow.
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Source: Hot News
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