Export earnings are not rushed home – Newspaper Kommersant No. 68 (7513) of 04/19/2023

A record trade surplus last year allowed Russian exporters to accumulate significant funds in foreign accounts, which was facilitated by the abolition of the requirement for mandatory repatriation of foreign exchange earnings, which, in turn, eased the sanctions pressure on companies. At the same time, last year, most of the balance in trade with the countries of the euro area “settled” in European banks, but now the companies have probably transferred funds to “friendly” jurisdictions, experts from the Institute of International Finance believe.

The abolition of the norm on the mandatory sale of foreign exchange earnings last summer and high commodity prices allowed exporters to create a significant reserve of funds in foreign accounts – according to the Central Bank of the Russian Federation, “other investments” in the structure of foreign assets of Russian residents increased by $141 billion over the year. This is due to placement by residents of funds on current accounts and deposits abroad, as well as an increase in trade loans, the regulator said in an explanation.

Recall that on June 21, 2022, the Government Commission on Foreign Investments decided to allow exporters to credit the currency received from non-residents to accounts abroad without its mandatory return to authorized banks, that is, without repatriation. It was assumed that this would ease the sharp strengthening of the ruble and save companies from additional restrictions related to the transfer of funds to the Russian Federation (mainly these restrictions were imposed by foreign banks in connection with sanctions against the Russian Federation due to its military operation in Ukraine).

The Institute of International Finance (IIF) estimated the “surplus” of the current account balance in 2021-2022 above its historical average of $215 billion (at the beginning of 2023, the “surplus” was replaced by a “deficit” – the account balance was below “normal” values , which, on the contrary, put pressure on the ruble). “It remains unclear where the claims on foreign countries accumulated due to the growth of the current account surplus are,” the IIF notes. Recall that for the year as a whole, the surplus of trade in goods and services of the Russian Federation amounted to $285.8 billion, and the net international investment position of the Russian Federation (the difference between the claims and obligations of Russian residents to non-residents) increased by $285 billion (including due to a decrease in foreign liabilities amid drop in direct investment in the Russian Federation and changes in the ownership structure of foreign companies).

In the case of a surplus in mutual trade with the countries of the euro area (it amounted to $84 billion last year), $58 billion remained in bank accounts in the euro area, the IIF writes, citing ECB data (in this case, the growth of liabilities to the Russian Federation is taken into account). In the case of banks in countries reporting to the Bank for International Settlements in Basel (mainly developed countries, but also, in particular, China and some offshore jurisdictions), out of a trade surplus in trade with these countries of $ 242 billion (according to data for the first three quarter of last year) $87 billion was concentrated in the banks of the same countries. These figures have probably declined by now, as companies were interested in transferring funds from countries that supported the sanctions, the organization’s experts believe.

Last week, against the background of the weakening of the ruble, the Russian Central Bank and the Ministry of Finance spoke out against the return of the demand for the sale of foreign exchange earnings. “The share of sales has slightly decreased, but not by much, that is, exporters still sell it even without the obligatory repatriation of export earnings,” said the head of the Central Bank, Elvira Nabiullina, at a joint meeting of State Duma committees, noting that the fact that companies leave their earnings abroad allows “to pay them for the necessary imports, and not only consumer goods, but also equipment and components.” At the same time, the first deputy chairman of the Central Bank, Ksenia Yudaeva, at a meeting of the working group in the State Duma on April 5, announced the preparation of proposals in order to collect more information from the largest exporters on foreign exchange earnings, assets and liabilities in foreign currency, in order to “better control flows from the point of view of financial stability” , however, it was only that the lack of such data complicates the Central Bank’s fight against money laundering.

Tatyana Edovina