21 Jun 2024 10:29

Russia loosens requirements for repatriation of foreign currency revenues; threshold reduced from 80% to 60%

MOSCOW. June 21 (Interfax) - The Russian government has decided to relax its requirement for the mandatory repatriation of foreign currency earnings by the largest Russian exporters, recently extended for one year.

Previously, exporters were required to credit at least 80% of foreign currency received under foreign trade contracts to their accounts in authorized banks; now the threshold has been reduced to 60%, the government press service said.

"The decision was made due to the stabilization of the national currency exchange rate and the achievement of a sufficient level of foreign exchange liquidity," the statement said.

The requirement for mandatory repatriation of currency and sale of foreign currency proceeds was introduced by presidential decree in October 2023. The measure is valid through April 30, 2025.

Some of the requirements were relaxed when the requirement was extended, for example, the deadline for exporters to credit FX revenue to their accounts was lengthened from 90 to 120 days, from the date of receipt of goods and services by non-residents. But the main thresholds to credit at least 80% of revenue and sell at least 90% of this was not changed.

The requirements apply to 43 groups of companies operating in the fuel and energy complex, ferrous and non-ferrous metallurgy, chemical and forestry industries, and grain farming.

The government has said these measures have shown their effectiveness in stabilizing the situation on the currency market. Central Bank Governor Elvira Nabiullina has said on several occasions the mandatory sale of foreign currency earnings is more of a psychological factor. "We believe that the importance of this measure for markets is secondary. Rather, it has a psychological significance for some economic entities that do not analyze trade balances," she has said.

"If the decision [on extending the mandatory sale obligation] is made, then we expect that the strictness of the requirements themselves will gradually weaken, and there will be a greater understanding that it is market factors that are at work here," Nabiullina has said.