Legal capital flight from Russia more than triples

Legal flight from Russia more than tripled last year compared with 2003, reaching US$7.9 billion, while the volume of money that illegally left the country via shadowy business transactions jumped by more than 50 percent, the Central Bank said on Thursday.

Capital -- in which Russian businesses and individuals send money overseas, through legal or illegal means, rather than investing it or saving it domestically -- has been a matter of key concern in the country's efforts to establish post-Soviet economic stability. In 1999 and 2000, capital flight amounted to as much as 10 percent of the country's GDP.

Thursday's figures represent about 2 percent of GDP.

Economists that the overall capital flight figure was below their expectations: the politically charged cases against tycoon Mikhail Khodorkovsky and the Yukos oil company as well as an increased volume of exports for the year meant the scope for money to leave the country had been particularly high last year, they said.

However they suggested that concerns over Russia's political course had helped push up the volume of money that the bank estimates to have been illegally transferred overseas, including by means of fictitious import and export contracts, which jumped from US$15.4 billion to US$23.6 billion, according to the bank's data.

In 2003, Russia recorded legal capital flight of US$1.9 billion. After showing net inflows in the second quarter of the year, capital flight leapt in the third quarter as the legal campaign against Yukos and its owners gathered pace.

Peter Westin, economist at Moscow's Aton investment bank, said he had anticipated capital flight of US$12 billion for last year, and noted that the central bank figures were normally subject to review later.

A bumper inflow in the last three months of last year of US$10.3 billion had taken the edge off the figures, Westin said, as Yukos began paying back a part of the US$27 billion that tax authorities say it owes in back bills.