The government, by presidential decree, will introduce mandatory sale of foreign currency earnings not for everyone
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Despite the government’s declarations that there is no need to return currency regulation to maintain the ruble exchange rate, the authorities are introducing requirements for the mandatory repatriation of foreign currency earnings for a limited number of companies. A decree on this was signed by the president, but not published. The government reports that the document proposes a special operating regime for 43 groups of companies – it includes the mandatory sale of proceeds, their provision of plans and schedules for currency sales, and Rosfinmonitoring control over compliance with requirements. The government does not directly name the reasons for the decision, which does not yet look like an effective way to put pressure on the exchange rate, but symbolically rather sharply attacks the business climate. They believe that the tightening will not affect conscientious exporters – it is likely that the previously existing recommendations on the sale of proceeds were not followed by all market participants.
The President of Russia signed a decree “On the implementation of the mandatory sale of proceeds in foreign currency received by individual Russian exporters under foreign trade agreements (contracts),” said press secretary of the head of state Dmitry Peskov. The decree approves the list of such exporters – these are 43 groups of companies in the fuel and energy complex, ferrous and non-ferrous metallurgy, chemical and forestry industries, and grain farming.
The text of the decree has not yet been published. According to Mr. Peskov, the document requires companies to credit earned foreign currency to their accounts in authorized banks (nothing is known about the procedure for selecting authorized banks) and carry out its mandatory sale on the domestic market. The percentage of currency that will be subject to mandatory sale and the period from which this obligation arises will be established by the government. Monitoring of the mandatory sale of foreign currency will be carried out by Rosfinmonitoring.
The government spoke about the mode of implementation of the decree.
Firstly, mandatory repatriation and sale of foreign currency earnings on the Russian market is introduced for individual companies for six months. The volumes and timing will be determined by the White House within 24 hours. Secondly, an obligation is being introduced for companies to provide the Bank of Russia and Rosfinmonitoring with indicative plans and schedules for the purchase and sale of foreign currency on the domestic market. The implementation will be monitored by representatives of Rosfinmonitoring, who will be implemented in the company. The White House promises to adopt regulations within a week.
Let us recall that the government has so far denied the need to return strict rules on the mandatory sale of foreign currency earnings. The Central Bank also hoped that the exchange rate could be stabilized through monetary policy measures. The regulator noted that exporters sell a sufficient amount of foreign currency on the domestic market even without strict restrictions. According to fresh data from the Central Bank, in September sales of foreign currency earnings by the largest exporters increased by 27% compared to August, and exchange rate volatility decreased by half – despite the fact that the September average exchange rate remained just as weak.
In itself, the “selective” mandatory sale of foreign exchange earnings does not look like a systemic solution to the problems of imbalances in the foreign exchange market.
On the one hand, establishing a standard for a specific company or industry that is significantly higher than its needs for foreign currency financing is unlikely to cause significant damage to its import plans in the short term – they will only be postponed, the burden on the treasuries of specific companies will increase, and small-scale losses are possible. losses due to the cost of financing: it is unlikely that all this can affect the stability of a large company, at least in the short term. On the other hand, from a medium-term point of view, a decision that, based on the extremely incomplete information available on the structure of foreign exchange transactions of companies in the last six months, is not able to significantly strengthen the ruble exchange rate on its own, has unpleasant consequences for the business climate, on a scale exceeding the potential effect – for example, the institution of Rosfinmonitoring commissioners is itself controversial from the point of view of access to corporate secrets, its need is not obvious (the same thing could have been implemented within the normal activities of the department or by expanding its powers without the presence of “currency commissioners” in companies) , and the “frightening” effect is obvious and clearly destroys the established rules of the game.
An alternative in the form of general economic institutions for controlling the movement of capital at the level of the Central Bank and the Ministry of Finance structures would apparently look even worse – however, there would be no justification for the need for such measures at all (except for the symbolic crossing of the ruble exchange rate of the 100 ruble mark, which has no economic significance of its own ./$) is not presented, as well as the announcement of a logic alternative to the logic of the Central Bank, which previously believed that there is no need for such measures in either a strong or weak version.
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