Russian investors are bringing in cash to support their industries. Experts expect the trend to continue, though the absolute amount remains small.

In a move to tap an improved investment climate at home, major Russian corporations are disclosing ambitious plans for spending sprees – trying to consolidate their grip on current businesses or boost growth to new levels.

The volume of capital that has been invested in the economy since the beginning of the year is a sign that the once-booming domestic-investment market, which lost steam in 2002, is picking up again, speakers said at an investment forum in February.

First off, there is the high level of activity on the eurobonds market, where several Russian companies have been able to secure long-term credit or other financial instruments. Oleg Vyugin, the Central Bank’s first deputy chairman in charge of monetary and credit policies, said Russian companies secured more than $1.1 billion in Eurobonds and other syndicated credits in January alone.

Ivan Materov, a deputy minister at the Economic Development and Trade Ministry, said the country’s gross domestic product had increased by 5.7 percent, while the gross sum of investment into the economy surged by 7.9 percent in January compared to the same period in 2002.

The relatively small size of the investment, which government officials said equals about $2.5 billion in absolute terms, has been attributed to seasonal factors – especially in January, when almost half of the month was spent on New Year and Christmas festivities.

But officials said that the positive growth is most important. The rate of investment has already outpaced that of 2002, largely seen in the business community as one of the poorest-performing years since the 1998 financial meltdown.

At the current level of 7.9 percent, the investment growth rate has already dwarfed that of last year, which stood at 2.6 percent, according to the State Statistics Committee.

The business community has received the rebound in investment activity on the financial market as good news. Local big spenders – especially in the oil, gas and transportation sectors – have already drawn up ambitious investment plans to capitalize on the upswing.

Leading the pack is Gazprom, the state-owned domestic natural-gas monopoly and the world’s largest gas producer and seller. It has increased its previously approved budget by 40 percent – from $4 billion to $5.6 billion – in its investment outlay for 2003. "About 40 percent of this sum will go into gas exploration and production, while 60 percent will go into upgrading the company’s gas-transportation network," Boris Urlov, the company’s deputy board chairman, said.

Similarly, the Railways Ministry plans to pump up to 107 billion rubles into investment projects, or about 30 percent more than the previously budgeted figure. And Unified Energy Systems, the state-owned company in charge of electricity provision and supply, also plans to boost its investment expenditure by about 47 percent, or from 60.5 billion rubles to 99 billion rubles, most of which will go into launching new power stations, according to company sources.

Yukos, Russia’s No. 2 oil major, is also in the mood to spend, and it has released plans to increase its investment expenditures for 2003 by over 36 percent, to about $1.76 billion. "Increased investments in exploration and production in 2003 are expected to be primarily related to the company’s continued development of gas assets," according to Yukos’ investment blueprint.

However, Russia’s sovereign rating is still two notches down from the investment rating level at which institutional investors are usually willing to commit their capital to a particular market. It may take another few years before investor confidence will really turn toward the country.