Zee Beam News

AKSAKOVO (Moscow Region), February 26, 2009 (RIA Novosti) - Capital flight from Russia reached some $40 billion in January, although the flow of money out of the country has now ground to a virtual halt, the finance minister said on Thursday. Alexei Kudrin told a meeting at the Federal Tax Service that net capital flight stood at around $130 billion in 2008. Addressing the service earlier Kudrin said that some $200 billion had been taken out of Russia from October 2008 through to late January 2009. "Those who wanted to take it out, did so, including Russian companies," the minister said. Kudrin gave an assurance that despite the capital outflow Russia would not introduce any currency limitations and that the ruble would remain a freely convertible currency. He added that the Russian oil industry would earn an additional 800 billion rubles ($22 billion) in 2009 due to the ruble's devaluation. Speaking about Russia's GDP, Kudrin said it was expected to fall in 2009, even if oil prices rise to $55 a barrel. The current forecast is $41 per barrel. "GDP will fall, even if oil prices climb not to $41 per barrel, but $44, $50, or $55," he said. With oil prices at $40 per barrel, the Reserve Fund will last 2.5 years provided budget parameters for 2010-2011 are kept within this year's target, the finance minister said. "Later we will have to balance the budget either by cutting spending, through borrowing or tax hikes," Kudrin said. He also said the country could be forced to cut spending further if oil prices fall below $40. Under an established forecast for 2009, drafted by the Economic Development Ministry, Russian GDP is expected to fall by 2.2% and industrial output by 7.4%, if the price for benchmark Urals oil remains at $41 per barrel.