Russia could lift capital restrictions on new investments to attract "friendly" and "own" money
MOSCOW. Feb 28 (Interfax) - Russian authorities are considering removing capital restrictions on new investments in order to stimulate both the inflow of investments from friendly jurisdictions and the repatriation of Russian money. The Finance Ministry supports such a move in concept, although the mechanisms for administering it have yet to be determined.
"This is still under discussion, but both friendly investors and Russian businessmen have requested exemption from restrictions, so to speak, for 'new' money that is brought into the country," Ivan Chebeskov, head of the Finance Ministry's Financial Policy Department, said at a financial forum organized by the Russian Union of Industrialists and Entrepreneurs (RSPP).
Many Russian investors keep capital abroad, he said, and many of them are willing to invest in the Russian economy, but they want a guarantee of the ability to freely dispose of their funds if for some reason they need to place these funds abroad again. "Such a mechanism is being discussed, including as part of building confidence in the market, so that investors do not have to worry about having liquid capital if they need it," he said.
He later explained to reporters that he was talking about the possibility of removing some of the restrictions of currency legislation on the withdrawal of funds that were invested from abroad.
"There are now a lot of restrictions on the transfer of funds abroad. There are investors, including friendly ones, or even our own investors, who have money there [in other countries]. They say: I want to invest, I want to buy a factory or modernize a factory, but I am afraid to invest for some reasons, because I am afraid that if I have to withdraw money again, I will not be able to. If they already have money there, whether it is a friendly investor, even a non-friendly one, what difference does it make to us, a non-friendly investor might also invest, or a businessman of ours, they will bring money here, invest it, but then they want to withdraw it after some time and then they run into all our restrictions which are in place in terms of currency regulation and so on. They say: can you "highlight" the money we've invested and say I can withdraw this amount," Chebeskov said.
The Finance Ministry sees this idea is viable, he said. "This way we stimulate the inflow of money here. We need sources [of funding for the economy]," he said.
"While there are many questions, both in terms of administration and how it might operate, but in general, conceptually, it seems to me, this is the right way to go. We need to attract investment, we need foreign investors," Chebeskov said.