1 Mar 2023 17:30

Main barrier to investing from abroad is $1 mln per month transfer limit - Russian dep finance minister

MOSCOW. March 1 (Interfax) - They key barrier on the path to investments from abroad is the monthly transfer limit for individuals who are residents and citizens from friendly countries abroad, the Finance Ministry said.

"The most important limitation is the $1 million per month transfer limit; this is the main limitation," Deputy Finance Minister Alexei Moiseev told reporters, commenting on proposals being considered by the ministry to stimulate the inflow of investments from friendly jurisdictions and the repatriation of Russian money.

In March 2022, the Central Bank limited the transfer of funds from abroad by resident individuals and citizens of friendly countries to $5,000 per month, then, gradually raising the bar, brought it to a maximum of $1 million starting July 1, 2022.

The idea of liberalizing restrictions on the movement of capital for foreign investors and Russian investors wishing to bring the funds they hold abroad into Russia "is being actively discussed, including with the Bank of Russia. In general, constructive discussions are going on in this area, that is, they are generally supported," Moiseev said. Questions remain about the investors for whom concessions should be made, and how to identify their funds, he said.

"We will never get a foreign investor if we put a limit on him when he exits, and no friendly countries will invest, despite the fact that, we believe, they could quite possibly fill a certain niche of outgoing unfriendly investors. To do this, we must guarantee them the absence of convertibility risk, as it is called in a broad sense, namely the absence of a restriction on exiting when they want to do so," the deputy minister said.

Another obstacle to investment is the type-C special account system introduced last year for persons from unfriendly jurisdictions.

"Second, there are all these stories about type-C accounts. If we see that some investor from a friendly country, for example, an Asian investor enters, but for some reason structures it through an unfriendly entity, this kind of thing could also be considered as a friendly investment," he said.

Russian authorities are considering the possibility of lifting capital restrictions on new investments from both friendly jurisdictions and Russian investors wishing to return their capital to Russia, Ivan Chebeskov, director of the Finance Ministry's financial policy department, said earlier.