A new round of devaluation was predicted for the ruble: the reason would be an oil export duty

The treasury expects to receive an additional 50 billion per month

Since October, a new mechanism for export duties on a wide range of goods began to operate in Russia, which will now be temporarily tied to the exchange rate of the Russian currency. Fiscal rates will change for many domestic goods that are in demand abroad: from food to raw materials. In particular, duties on foreign supplies of oil and a number of fuels will increase by $2.5 to $23.9 per ton. Thus, the government is going to force exporters to share part of the excess profits with the state and thereby strengthen the exchange rate of the national currency, which has again begun to fall noticeably.

As a result of changes related to the fiscal rules of Russian exports, from October 1, the duty on the export of Russian oil to foreign markets increased by $2.5 to $23.9 per ton. Tariffs on foreign sales of “dark” petroleum products (fuel oil, gas oil, diesel) will increase by the same amount. Duties on the export of “light” fuel (with a higher octane number) will rise in price by only 70 cents – to $7.1 per ton. This decision of the Russian authorities is aimed, first of all, at supporting the domestic market.

“As officials plan, increasing export duties will bring the treasury up to 50 billion a month. This seems to be true, because this amount is equal to 10% of the monthly oil and gas revenues of the federal budget. It is difficult to give a specific figure, since data on the volume of oil and fuel exports since 2022 are not publicly available,” says Artem Tuzov, director of the corporate finance department of IVA Partners.

“The customs measures introduced by Moscow are quite constructive,” explains Arikapital Management Company investment strategist Sergei Suverov. Oil and gas revenues that domestic exporters receive do not oblige them to increase sales of foreign currency within the country. Net sales of foreign currency by our largest exporters, for example, fell by more than 40% in April. This happened against the backdrop of a sharp increase in the share of international payments in rubles. And since export revenues do not flow into our foreign exchange market, the exchange rate of the ruble has nothing to rely on and the Russian national currency is weakening. Until recently, the government tried to influence exporters through persuasion. “There were such unspoken conversations that in August our exporters should use more than 40 billion of the 73 billion rubles of additional oil and gas revenues to purchase foreign currency and gold,” says the expert. “There is a suspicion that such a plan was never implemented – there was a shortfall in mid-summer sales amounted to 30 billion rubles out of total export revenues.”

Now, due to increased duties, exporters will have to share with the budget. But experts warn of possible gaps in the new export tariff system. The updated export tax rates provide that increased duties will have to be paid if the exchange rate is above 80 rubles per dollar. The weaker the ruble, the more exporters will have to pay extra to the state. “Russian commodity exporters just two or three trading weeks ago reached a selling price level of $80 per barrel. Let us remind you that the price “ceiling” set by the West for a “barrel” is $60. To strengthen the national currency, the state requires increased sales of dollars within the country. The path to this has been chosen. Only in their contracts, it will now be more profitable for domestic commodity companies to reduce the sales level to $79 rubles per barrel in order to reduce tax payments and increase the export margin,” notes Suverov.

“The increase in export duties is designed for a short-term effect. The budget will, of course, receive the necessary additional revenue. However, this will lead to sales of larger volumes of oil and petroleum products, and not only in foreign markets,” says international trade expert Raisa Donskaya. According to the expert, this measure will help overcome the problems with a significant drop in the volume of gasoline and diesel at domestic gas stations, which has already caused prices at gas stations to soar. On the other hand, if the initiative with duties on the supply of oil and petroleum products is not canceled in the coming months, then the income of commodity companies will decrease, and therefore tax collection will fall. The export sales price of petroleum products exceeds the cost of fuel on the domestic market. Companies give preference to supplies abroad. They use the income received to purchase and repair equipment, explore new deposits and pay salaries to employees. The opinion that oil-producing holdings deliberately keep foreign currency earnings to themselves is not entirely correct, believes MK’s interlocutor. With this money, companies buy equipment that is not produced in Russia and pay for services for transporting raw materials. During the first half of 2023, the volume of supplies of oil and petroleum products from Russia soared 11 times – to $30 billion.

“Our currency continues to weaken and the US dollar has long been ready to overcome the level of 100 rubles,” warns Donskaya. — It’s too early to talk about returning the exchange rate to 80 rubles. The measures taken by the state have so far had little effect on the domestic currency. To support the ruble, more drastic methods are required, for example, the sale of currency from the reserves of the Central Bank and the Ministry of Finance, and perhaps new, prohibitive restrictions on the withdrawal of funds abroad.”

Help “MK”:

In addition to petroleum products, the new duties introduced on October 1 also included the export of electricity, copper, zinc, aluminum, gold, diamonds, polymers and rubbers. Increased tariffs will be imposed on foreign supplies of building materials (crushed stone, lime, marble and other concentrates, as well as base metals). From the list of consumer goods supplied abroad, sugar, confectionery, canned vegetables and fruits, as well as alcohol and tobacco were subject to increased rates.