12/14/2023

Updated: 12/14/2023

Billions of dollars in raw materials revenue, which, according to the Central Bank, the Russian economy received, turned out to be a statistical error.

Out of $37.2 billion in revenues from exports, which the Central Bank reported in its payment data balance for October, $4.2 billion, or more than 10%, did not exist in reality, the regulator admitted, recalculating the data. According to the revised estimate of the Central Bank, the economy earned $33 billion from exports, which half consists of the export of oil and petroleum products abroad. Another $1.3 billion “disappeared” from the data on income from foreign assets; the Central Bank also “revised” them downwards.

As a result, every third dollar in Russia’s trade balance for October turned out to be “fake”: instead of $14.3 billion, its positive balance is now estimated at $9.4 billion. More than half of the money has disappeared from the balance of payments, which takes into account all transactions, and not just trade : its surplus in October from an initial $11.2 billion after the revision shrank to $4.9 billion.

The “radically revised” data of the Central Bank is a “surprise”, and they look strange, notes Egor Susin, managing director of GPB Private Banking. In theory, the same adjustments should have appeared in countries with which Russia trades, but this did not happen. “The main trading partner, China, did not demonstrate anything similar,” points out Susin.

Balance of payments estimates were updated “due to the receipt of additional reporting data,” the Central Bank writes. He does not directly explain where the currency disappeared, although he admits that money for exports hangs up abroad. Russian companies have growing “accounts receivable, including for unfinished foreign trade settlements,” the regulator writes. This, as the Central Bank notes, explains the growth of foreign assets of Russian business – by more than $90 billion last year and by another $40 billion this year.

We can talk about India, which has become the main buyer Russian oil after the introduction of the European embargo. Some transactions were carried out in rupees, which turned out to be impossible to withdraw from India. A Reuters source in the banking market previously estimated the frozen revenue at $39 billion – an amount equal to oil and gas budget revenues for five months.

It is possible that the Central Bank of the Russian Federation is simply “lying” about currency flows to and from Russia, believes the chief economist of the Institute of International Finance (IIF ) Robin Brooks. Although the economy’s net balance of payments surplus fell sharply from $11.4 billion in September to $4.3 billion in November, this had no impact on oil and gas budget revenues, which almost tripled from $5 billion per month at the beginning of the year to more than $15 billion now.

The Kremlin keeps all the money it earns secret, Brooks concludes. He adds that Vladimir Putin is being helped in this by “friends in the EU” and the Greek oligarchs, who transported Russian oil with their tankers and then began selling ships to the Kremlin’s “shadow fleet.”

(C)MOSCOW TIMES 2023