Russia won’t tighten capital controls for the time being after officials reached an informal agreement with exporters to surrender more of their foreign revenues, according to the business daily Vedomosti.
(Bloomberg) — Russia won’t tighten capital controls for the time being after officials reached an informal agreement with exporters to surrender more of their foreign revenues, according to the business daily Vedomosti.
President Vladimir Putin discussed possible measures at a meeting that included Bank of Russia Governor Elvira Nabiullina and Finance Minister Anton Siluanov, the newspaper said. Authorities opted to monitor exporters for now, instead of mandating stiffer restrictions on sales of foreign-currency proceeds, Vedomosti said, citing people it didn’t name.
The informal agreement with companies applies primarily to non-energy producers, Vedomosti said, since oil firms already pay the equivalent of half their revenues in tax. When it comes to repatriating foreign earnings, fertilizer producers were seen as the biggest laggards, according to Vedomosti.
The ruble depreciated in morning trading after three days of gains that had made it the best-performing currency in the world this week.
As part of an effort to support the ruble, the Finance Ministry had proposed making it mandatory for exporters to sell a bigger share of their foreign-currency revenues on the domestic market, as well as restricting dividend and loan payouts abroad, including to friendly countries, for all Russian companies, people familiar with the matter told Bloomberg earlier in the week.
The authorities also considered a ban on any transactions that could lead to the withdrawal of capital from Russia, they said.
The initiatives were discussed at a meeting between the government and exporting companies on Monday, but no breakthrough was reached.
Economic Countermeasures
Russia used capital control measures last year to save the national currency from collapse after the US and its allies imposed sweeping sanctions for the invasion of Ukraine. They were partially lifted once ruble appreciation become problematic for the budget, reducing proceeds from oil and gas exports.
Russia’s central bank raised its benchmark interest rate to 12% from 8.5% on Tuesday after the ruble broke through 100 to the dollar for the first time since March last year. Despite the ruble’s gains this week, it’s still among the worst three performers in emerging markets, having lost about 22% since the beginning of the year.
Speaking at the meeting with Putin, Nabiullina said the rate hike was largely a response to inflationary risks and not to weakness in the exchange rate, Vedomosti said.
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