Moscow, June 6:

Hefty bank loans and share placements by Russian companies have brought a wave of capital into the country this year, potentially jeopardizing the government’s inflation targets, the World Bank said Wednesday in its latest report on Russia.

The first five months of the year could see record capital inflows of $45 billion (euro33 billion), the report said, citing Central Bank forecasts. That compares with total inflows of $42 billion (euro31 billion) for the whole of 2006, it said.

State-controlled oil group OAO Rosneft contributed to the surge, borrowing some $22 billion (euro16 billion) to buy oil fields and refineries that were sold in the liquidation of the Yukos oil company.

Meanwhile, state-controlled OAO Bank VTB raised $8 billion (euro6 billion) in an initial public offering last month. “Money supply growth is reaching record levels, and less of the monetary expansion is being sterilized by accumulation in the Stabilization Fund than in the past,” the report said.

“Inflation has remained under control in early 2007, but could well become problematic in the second half of the year.”