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. Last Updated: 07/27/2016

First Net Inflows Expected in '04

Itar-TassFinance Minister Alexei Kudrin
Russia expects this year to receive a net inflow of $3 billion to $4 billion of capital this year, the first such inflow since the Soviet Union collapsed, Finance Minister Alexei Kudrin said Monday.

"We are expecting a net inflow of capital into Russia this year for the first time since 1990," Kudrin said in Moscow.

Russian capital flight shrank in 2003 to $2.9 billion, its lowest in at least three years, after President Vladimir Putin's policies to spur economic growth prompted companies to invest more money at home than abroad.

Russian companies are bringing more cash home, attracted by six straight years of economic growth since 1999. Putin has cut taxes, reduced spending and brought political stability since taking over from Boris Yeltsin on Dec. 31, 1999. More than $20 billion per year was sent abroad from Russia in the 1990s, helping undermine the economy before the 1998 recession.

Rising crude oil prices also have helped boost economic growth in Russia, which in January and February probably overtook Saudi Arabia as the world's biggest oil producer.

Kudrin also said the government had decided on the exact mechanisms to raise oil export duties to collect more of crude producers' profit after Putin demanded the government ramp up taxes on the extraction of natural resources to fund plans to cut the economy's dependence on commodities.

The country will raise "the burden through oil export duty" to 65 percent when oil prices exceed $25 per barrel, from 45 percent, Kudrin said. It will rise to 45 percent if oil is traded between $20 and $25 per barrel, up from 35 percent, he said. Russia calculates oil duties every two months, linking them to an average price of Urals blend crude by setting the duty's base level and charging a percentage of the price in excess of the base level. It now charges $4.26 per exported barrel. Kudrin and his spokesman Gennady Yezhov were unavailable for comment to clarify what the finance minister meant by "the burden." Kudrin's comments may relate to rates Russia will apply to various price bands, analysts said.

"The rate of 65 percent seems to be a coefficient to multiply the price difference between $25 a barrel and the actual price when it exceeds $25 a barrel," said Pavel Kushnir, an analyst at United Financial Group.

On Friday, Putin said economic growth must be boosted by introducing "fair" and "economically based" taxes on companies that extract natural resources.

Kudrin said on Friday that extra oil taxes would enable the government to raise an extra $2 billion per year if oil averages $27 per barrel or $3 billion if it averages $30 per barrel.