1. Slide 1 | December 2010 | Foreign Debt Growth Outlook December 2010 Anton Stroutchenevski, Senior Economist Foreign Debt Growth Outlook

2. Slide 2 | December 2010 | Foreign Debt Growth Outlook Russia faces mostly institutional constraints to borrow externally  Russia is still among the countries with quite low foreign debt/GDP.  However, capital flows are very volatile: in 1H08, Russia enjoyed a net capital inflow that rapidly turned into a net capital outflow in 2H08.  The potential for export growth acceleration is limited. Thus, there is a threat that the trade balance will start shrinking if oil prices stabilize.  Without institutional changes, the country will not be able to borrow externally.

3. Slide 3 | December 2010 | Foreign Debt Growth Outlook GDP per capita in the former Soviet republics in 1991 and 2009, $ Source: IMF

4. Slide 4 | December 2010 | Foreign Debt Growth Outlook GDP per capita in the former Soviet republics in 2009 and external borrowing Source: IMF, CIA, national banks

5. Slide 5 | December 2010 | Foreign Debt Growth Outlook Foreign debt accumulation slowed after the crisis Source: Central Bank, State Statistics Service, Troika estimates

6. Slide 6 | December 2010 | Foreign Debt Growth Outlook The Central Bank expects capital inflow to finance negative current account in long run, $ bln Source: Central Bank

7. Slide 7 | December 2010 | Foreign Debt Growth Outlook Russia was attractive for investors only when macroeconomic risks were low and oil prices were growing Source: Central Bank

8. Slide 8 | December 2010 | Foreign Debt Growth Outlook After the crisis, economic growth decelerated… Source: State Statistics Service

9. Slide 9 | December 2010 | Foreign Debt Growth Outlook … external and internal balances deteriorated… Source: Finance Ministry, Troika estimates Current account and budget balance, % of GDP Breakeven oil price for federal budget Source: Finance Ministry, Troika estimates

10. Slide 10 | December 2010 | Foreign Debt Growth Outlook … inflation accelerated… Source: State Statistics Service CPI, y-o-yCPI, YTD Source: State Statistics Service

11. Slide 11 | December 2010 | Foreign Debt Growth Outlook … and the ruble depreciated, despite high oil prices Source: Central Bank

12. Slide 12 | December 2010 | Foreign Debt Growth Outlook Who will Russia compete with on capital markets? Source: IMF Current account deficits, 2009, $ bln

13. Slide 13 | December 2010 | Foreign Debt Growth Outlook Source: IMF, World Economic Forum The quality of Russia’s institutions is too low to compete for sufficient inflow

14. Slide 14 | December 2010 | Foreign Debt Growth Outlook Source: Central Bank Due to poor quality of domestic institutions, capital outflow remains sustainable Changes in foreign assets of domestic economy

15. Slide 15 | December 2010 | Foreign Debt Growth Outlook Conclusions  Without improvement in macroeconomic policy and the quality of its institutions, Russia will be hardly able to compete successfully on the capital markets and guarantee sustainable capital inflow.  Domestic capital outflow trends will remain an important measure of the country’s appeal to investors.

16. Slide 16 | December 2010 | Foreign Debt Growth Outlook

17. Slide 17 | December 2010 | Foreign Debt Growth Outlook Research Department+7 (495) 258 0511 Real Estate AnalystIgor Vasilyev+7 (495) 933 9842 Chemicals Senior AnalystMikhail Stiskin+7 (495) 933 9839 AnalystIrina Lapshina+7 (495) 933 9852 Transport AnalystKirill Kazanli, CFA, CPA+7 (495) 933 9853 Small and Mid Cap AnalystMikhail Ganelin+7 (495) 933 9851 Assistant AnalystIvan Belyaev +7 (495) 258 0511 Market Analysis AnalystNadezhda Kireeva+7 (495) 933 9855 Economy Senior economistAnton Stroutchenevski+7 (495) 933 9843 Fixed Income Head of FI ResearchAlexander Kudrin+7 (495) 933 9847 Senior AnalystAlexey Bulgakov+7 (495) 933 9866 AnalystEkaterina Sidorova+7 (495) 933 9849 AnalystStanislav Ponomarenko+7 (495) 933 9857 Ukraine StrategistRoman Zakharov+38 (044) 207 3780 EconomistIryna Piontkivska Senior AnalystYevhen Hrebeniuk Senior AnalystIvan Kharchuk AnalystAlexander Tsependa AnalystMaria Repko Kazakhstan AnalystZaurbek Zhunisov AnalystAinur Medeubayeva Senior Management Chairman of Board of Directors and CEO, Troika DialogRuben Vardanian Chief Business OfficerJacques Der Megreditchian Head of Global MarketsPeter Ghavami Chief Economist, Managing DirectorEvgeny Gavrilenkov Head of ResearchPaolo Zaniboni+7 (495) 787 2381 Strategy Chief StrategistKingsmill Bond, CFA+44 (207) 583 3257 StrategistAndrey Kuznetsov+7 (495) 933 9844 Oil and Gas Senior AnalystOleg Maximov+7 (495) 933 9830 AnalystValery Nesterov+7 (495) 933 9832 AnalystAlex Fak+7 (495) 933 9829 Utilities Senior AnalystAlexander Kotikov +7 (495) 933 9841 AnalystIgor Vasilyev+7 (495) 933 9842 Assistant AnalystAndrey Trufanov+7 (495) 258 0511 Telecoms, Media and IT Senior AnalystEvgeny Golossnoy+7 (495) 933 9834 AnalystAnna Lepetukhina+7 (495) 933 9835 Metals and Mining Senior AnalystSergey Donskoy, CFA+7 (495) 933 9840 Senior AnalystMikhail Stiskin+7 (495) 933 9839 AnalystIrina Lapshina+7 (495) 933 9852 Assistant AnalystStanislav Ermakov +7 (495) 258 0511 Manufacturing AnalystMikhail Ganelin+7 (495) 933 9851 Assistant AnalystIvan Belyaev +7 (495) 258 0511 Financials Senior AnalystAndrew Keeley+7 (495) 933 9845 AnalystOlga Veselova+7 (495) 933 9846 Consumer AnalystMikhail Krasnoperov+7 (495) 933 9838 Assistant AnalystArtur Galimov +7 (495) 258 0511