MOSCOW – More money entered Russia than left it last year for the first time in the country's post-Soviet history, Deputy Prime Minister Alexander Zhukov said Monday.
After a year of record foreign borrowing by Russian companies, Zhukov told a Kremlin meeting that the net inflow of $300 million reported in Central Bank data was "evidence of a positive change in the investment climate in Russia."
In 2004, when a politically charged tax probe against the Yukos oil company was reaching its climax, capital flight jumped from $1.9 billion in 2003 to $8 billion. In previous years Russia has reported capital flight as high as $25 billion.
But 2005 saw many investors put behind them the fears over property rights that the Yukos case raised.
Observers say the probe against Yukos — which saw its biggest unit end up in state hands after it was auctioned off in December 2004 to pay part of a massive disputed back tax bill — was driven by the state's desire to recapture influence in the oil sector as well as punishment for the perceived political aspirations of its jailed founder Mikhail Khodorkovsky.
After rallying in May, around the time of Khodorkovsky's widely expected conviction, Russia's benchmark RTS exchange had gained over 80 percent by the end of the year.
As the price of Russia's main export — oil — rose to record highs, investors continued to pour money into Russian stocks.
At the televised Cabinet meeting during which Zhukov spoke, President Vladimir Putin noted that the health of the stock market, which has continued to rise since the start of the year, was a "good growth indicator."
After the carve-up of Yukos, the state continued to cement control of Russia's energy resources in 2005, leading to an unprecedented influx of foreign borrowing.
In September state oil company Rosneft agreed to borrow a record $7.5 billion from foreign banks in a complicated deal to enable the state to increase its share of the Gazprom gas monopoly to a controlling stake. Gazprom, which is the world's biggest natural gas producer, later sought foreign funding itself for its $13 billion acquisition of the Sibneft oil company.