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

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In early October 2013, disappointing and at the same time alarming statistics regarding the dynamics of Russia's external borrowings appeared on the website of the Russian Central Bank. Looking at the numbers that describe the state of Russia's external debt, 2013 promises to be another all-time high. According to preliminary data, as of October 1, the total amount of borrowings broke a 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 an outflow of capital from the Russian Federation at the level of 62 billion this year, which looks a little more optimistic compared to the previous estimate (67 billion). and will be discussed in our article.

Relationship of indicators

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

Evaluation by experts

Alexander Morozov, HSBC's Chief Economist for the CIS and Russia, focuses on the low current trade account surplus in the third quarter (+$29.500 billion). For the same period in 2012, this figure was twice as much (+61.500 billion dollars). And if we consider the third quarter separately, then the numbers look even more depressing: only $ 1.1 billion, which is five times less than in the comparable period last year. With net capital outflows still modest, a low surplus is bad news. Moreover, A. Morozov believes that this indicator is likely to be revised towardsdowngrades. In turn, Daria Zhelannova, deputy. Director of the analytical department of Alpari, commenting on the current external debt of Russia, recalls the difference in methods for calculating debt from 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 yet. But the Central Bank, in addition to government debt, also fixes the debts of corporations and banks.

And here the situation is already beginning to inspire fear. So far, according to the expert, the following picture is emerging: Russia's total external debt 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 be able to avoid devaluation, and nat. the currency may well drop to 40 rubles/dollar.