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Oct 16, 2021
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Record outflow of capital “ate” Russia’s oil and gas revenues

Record outflow of capital

Photo: YAYTASS

The favorable energy situation is likely to please business generals and officials, but cannot please most Russians. The surplus profits that the country receives from the sale of gas and oil go by their pockets.

According to the Central Bank, the net capital outflow from Russia from January to September 2021 amounted to $ 59 billion. Of these, $ 33.9 billion fell on the third quarter. And in the third quarter, the country received a comparable $ 40.8 billion (and a record in history!) In the form of a surplus of the current account of the balance of payments due to the growth of foreign exchange earnings from hydrocarbon exports.

It turns out that the lion’s share of the excess profits from the export of raw materials was exported from Russia.

This is not an accident, but a systemic phenomenon of the post-Soviet era. At the rate Sergei Glazyev, the outflow of funds from the Russian economy over the past 30 years has exceeded $ 1 trillion. About half a trillion revolves between offshores and the Russian economy, and the second half of a trillion has evaporated altogether in an unknown direction, noted the ex-adviser to the President of the Russian Federation.

However, no indication that Vladimir Putin listened to Glazyev, no. “Capital outflow is taking place, it is quite obvious,” the president stated, noting that the movement of capital is a natural process. Putin’s indifference is striking. The movement of capital in itself may be natural, but the movement of money only outside, out of the country, looks like a robbery of the Russians.

The responsibility for this lies with the authorities, which are unable to effectively stop the export of capital. Moreover, it creates favorable conditions for this. So, in June, Putin allowed the placement of foreign exchange earnings from the export of supposedly non-primary goods (in fact, ferrous and non-ferrous metals, gold, grain – Ed.) On the accounts of foreign banks, the MGIMO professor pointed out. Valentin Katasonov

Russia needs a radical change in its economic policy. “To return to the country over 40 thousand enterprises registered in offshores. Prohibit the registration of Russian legal entities in foreign jurisdictions. Restrict the participation of foreign capital in Russian joint-stock companies, ”the left opposition insisted in the State Duma of the VIII convocation on the eve of the first meeting.

According to RAS Academician Robert Nigmatulin, the topic of the export of capital is political and should be under the control of parliament.

– In Russia, only 55 percent of GDP is realized in the form of monetary incomes of the population. The rest, including, are being withdrawn abroad. In other countries, for example in Poland – 70 percent. This experience should be studied and worked with scientists. And there is one more thing. If we summarize the data on imports from different countries, then they differ twice from the data of the Customs Service. The same goes for exports. These are also serious losses – about 8 trillion rubles. All this must be monitored.

“SP”: – How?

– It is impossible to abolish the export of capital in a market economy. But the state can and should control this process. This is normal and accepted in most of the developed countries of the world. Exported funds, especially for personal consumption, should be taxed. It is not necessary to introduce the tax immediately, gradually. And besides, it is necessary, if not to prohibit, then to greatly reduce offshore jurisdictions. Nobody should avoid taxes.

“SP”: – At the same time, in June, by his decree, Putin himself gave relief to the export of capital …

– Now Belousov correctly defends the idea that surplus profits generated by the depreciation of the ruble should be taxed. But in the government, apparently, many are not interested in this … The media are beginning to disgrace the ideas of the Deputy Prime Minister. Like, he wants to establish socialism. This is nonsense, manipulation. Only the political will of the president will save here. He must be concerned that our resources are not wasted.

And for this a serious special service should appear under the control of parliament. We also have an Accounts Chamber, accountable to the Federal Assembly.

Chief Analyst at TeleTrade Pyotr Pushkarev proposes to act by methods of economic incentives.

– The problem is that capital does not find a worthy application for itself within the country. Private investors do not see any reason to invest in their own economy, since they do not expect an effective return on such investments. And after all, money comes from the export of metals, oil, even grain or buckwheat, and often from other simple and more or less well-established business schemes, but the profit received does not stay in Russia for a long time.

Any business that decides to scale up is practically not protected in the judicial aspect from attempts of raider seizures. And this means that every middle-class businessman, at least thinking about jumping a little above the usual framework, risks losing in the end everything that he created. Suffice it to recall the fate of VKontakte or Euroset. At the exit, we have the export of “surplus” capital.

But the basic reason, which, in theory, is much easier to cope with, is still the insufficient capacity of the Russian domestic market: our people do not have enough money to buy out some more noticeable volume of goods and services produced. Only some successfully found niches, or some know-how, exclusive, work for expansion, and there is no talk of the possibility of effectively using one’s capital as a mass phenomenon.

“SP”: But since the export of capital increases, it means there is something to export …

– It remains to figure out how to interest at least a part of this money to stay in the country, and not flow into offshores or for the purpose of consumption, purchase of real estate or luxury goods abroad. The recipes for stimulating capital remain generally known. It is enough to start with two things.

First, subsidies are required in the form of co-investment or the return of most of the taxes already collected by the state in the past from each particular private company, so that for every two or three rubles that a businessman is willing to invest in development, there would be at least another ruble of aid, and not levies for federal and local level. That is, not just abstract “tax benefits” in the future from incomes that may never be received by this business if it does not expand, but co-investment, so that the state would offer such a business to share with it in terms of risks, and on profit, with the right of subsequent purchase by a private investor of the entire business in a few years, if things go uphill.

Moreover, it is necessary to co-invest and give various tax benefits not only to the conditional Skolkovo, but also to “normal” ordinary small, even family and even more medium-sized enterprises. By attracting banks to these schemes on favorable terms, both by organizational efforts, and by the budgets of local authorities, which should be replenished from the federal level in a targeted manner. Then local budgets will be more actively replenished by businesses that have already earned with their help.

“SP”: – Boldly …

– And secondly, a reverse, regressive scale of taxes on the wage fund is ripe: a system in which the employer, the more he raises salaries for his employees, the less he pays taxes and contributions to social funds. Yes, for some time, the Pension Fund and the MHI fund will not count their usual receipts, but these holes will be easily closed by part of the reserves, just as the Pension Fund of the Russian Federation actually receives annual subsidies from the budget.

We will have to allocate such subsidies from the budget for five, seven or ten years, and the budget itself will have to be reduced with a deficit, and not with a senseless surplus, as it is now. But over the years, real

channels for increasing the incomes of the most actively employed millions of citizens in the economy, which will finally create an increased demand in the domestic market, and producers will begin to produce more goods for the sake of whom.

“SP”: – Are there any successful examples of such a policy?

– To promote domestic consumption is a task that seemed insoluble in China as early as three decades ago, but concern for the growth of incomes of its own population can gradually bring any economy out of the vicious circle. But alas, now the officials sitting in their offices think least of all about applied prospects for more than a couple of years ahead.

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