From Russia with love: individuals withdraw more than $20bl abroad over 6 months

Most money go to Switzerland, the US and the UK

From Russia with love: individuals withdraw more than $20bl abroad over 6 months

Individuals transferred abroad more than $12 billion in the second quarter of 2018. On average, $300-326 was transferred in one transaction to the US and the UK, to Switzerland — $11,800. As a rule, about half of the money returned to the country. Thus, according to Realnoe Vremya estimates, since the beginning of the year the net outflow amounted to $11,2 billion, and for 2010-2017 it exceeded $230 billion.

Most of the Russian money is far not in China

In April-June 2018, individuals (residents and non-residents) withdrew $12,1 billion from Russia, while less than $5,8 billion returned back. The balance of cross-border transfers thus remains negative (-$6,3 billion).

According to the data of the Central Bank of Russia, money from the country were withdrawn mainly by residents. About half of all funds transferred by them ($4,5 billion out of $9,1 billion) are transfers to their own accounts in other jurisdictions. More than $1 billion was issued as ''gratuitous transfers''. Another $960 million were transferred abroad by the population as payment for goods and services. In particular, $160 million were spent on education, as well as medical and consulting services.

Individuals (including non-residents) transferred most of their funds to far abroad countries — $8,6 billion, while the CIS countries accounted for less than a third of the total amount of transfers. The main destination from Russia was Switzerland: a little less than $2 billion, or 16% of the total amount of transfers. On average, about $11,800 went for one transaction from Russia to Switzerland.

The US and the UK take the second and third places by the amount of transfers from Russia: $729 and $711 million respectively. The average amount of the operation was $300 and $326. Latvia, Spain, Germany, Monaco, Cyprus, Austria and China are also among the ten largest cross-border transfer destinations. A total of $2,4 billion of Russian money settled in these countries. In the case of the CIS, most of the money from Russia went to Uzbekistan, Kyrgyzstan and Tajikistan, amounting to $2,4 billion.

Interestingly, the transfers to Switzerland, the United States and the United Kingdom were mainly made by Russian citizens, while among those who sent money to the CIS countries the share of residents was much smaller.

To Russia, the money went also mainly from far abroad, almost 85% of the total amount of transfers in favour of individuals came from there. The largest contracting state in this case was also Switzerland — $1,2 billion were transferred from the territory of this country to Russia (the average amount of one transaction — $40,300). The transfers from the US amounted to $824 million, and the third place is taken by Latvia with an amount of $432 million. The top 10 largest counterparties for transfers to Russia also include the UK, Germany, Cyprus, Luxembourg, Singapore, the UAE and Israel. In total, from there it came as much as from Switzerland — $1,2 billion.

The transfers to Russia usually mean that individuals use their foreign accounts to replenish their own wallets. In general, the fact that money more leave the country than return — of course, not news. The balance of these operations has never been positive, says Sergey Pukhov, a leading expert at the HSE Development Centre. Thus, for the first 6 months of this year, the net capital outflow from individuals exceeded $11,2 billion, and for 2010-2017 it amounted to $233,9 billion.

Volga Federal District: money go abroad through Tatarstan and Samara Oblast

Among the regions of the Volga Federal District, the largest turnover of cross-border transfers in the second quarter was in Tatarstan. Residents and non-residents withdrew abroad from the territory of the republic $106,4 million, while the return receipts amounted to $14,7 million. However, Tatarstan has not always been the leader by the volume of transfers. For example, in October-December 2017, the republic was only the third in the Volga Federal District (the first was Samara Oblast, the second — Nizhny Novgorod Oblast).

In April-June this year, Samara Oblast lagged behind Tatarstan by a small margin: transfers of individuals from Russia exceeded $87 million, to Russia — $31,3 million. Nizhny Novgorod Oblast, Perm Oblast and Bashkortostan took the third, fourth and fifth places respectively. There, individuals transferred a total of more than $92 million outside the country, and received more than $51 million. The regions with the smallest turnover of transfers were Mordovia, Chuvashia and Mari El: in these three regions, it amounted to a total of $10,7 million.

Tatarstan, along with the largest volume of transfers, has the largest net outflow of funds: the negative balance of transfers in the region reaches almost $92 million. For comparison, in Samara Oblast the gap between the withdrawn and received amount was equal to $55,8 million, in Nizhny Novgorod Oblast — $22,3 million.

At the same time, the balance was positive in six regions of the Volga Federal District. We are talking about Mari El ($0,4 million), Chuvashia ($0,7 million), Orenburg Oblast ($1,1 million), Penza Oblast ($1,4 million), Saratov Oblast ($2,6 million) and Ulyanovsk Oblast ($4,1 million).

By Artyom Malyutin, Realnoe Vremya analytical department
BashkortostanKirov OblastUdmurtiaTatarstan