12 Oct 2023 14:35

Shokhin: Introduction of mandatory currency sale no surprise; who is eligible depends on revenue situation

MOSCOW. Oct 12 (Interfax) - The decree by the Russian President on the introduction of the mandatory repatriation and sale of foreign currency earnings by the largest exporters for six months did not come as a surprise to business: the issue was discussed with companies last Saturday at a meeting with Russian First Deputy Prime Minister Andrei Belousov, President of the Russian Union of Industrialists and Entrepreneurs (RSPP) Alexander Shokhin told journalists.

As for which companies may be included in the decree (the message mentioned 43 groups of companies from among the main export industries), he said this would depend on the situation with foreign exchange earnings in each specific company.

"Since a specific list of companies is the prerogative of the government commission, the industry sectors into which all the main exporters operate have been identified. I think the decision will be made, inter alia, depending on the specific situation with the returns of foreign currency earnings in certain companies," Shokhin said.

On average, Russian large exporters return up to 90% of their foreign currency earnings, he said.

"Moreover, when there is a delay in foreign exchange earnings, this is either an advance on imports, or of course, it could be due to uncertainty in the exchange rate. Since the ruble falls regularly, to hold back the return of foreign exchange earnings for a while is to make a little money on this," he said, explaining companies' remaining unsold currency.

Shokhin repeated the thesis that the companies' interest in "holding" currency will be lower if the exchange rate stabilizes. "I would like there to be counter-movements on the part of the monetary financial authorities, to prevent excessive volatility in the ruble exchange rate. Then this argument (to "hold" foreign exchange earnings in order to earn money) will disappear for exporters; they will not have to be subject to administrative regulations such as the sale of 100% of their foreign exchange earnings," he said.

"I think that both circumstances, including the assessment of how much foreign currency exporters need for imports, should be considered, of course," he emphasized.

Shokhin said the proposal to introduce mandatory sales of foreign currency earnings was discussed for a long time by the Central Bank and the government. "The Central Bank was against, as you know, while the Ministry of Finance, the Finance Minister, was in favor. Therefore, they probably came to the conclusion that there are no other techniques, let's say, to maintain a stable exchange rate and increase the return of foreign currency earnings," Shokhin said.

The day before, it became common knowledge that the president had signed the decree "On the Implementation of the Mandatory Sale of Proceeds in Foreign Currency Received by Individual Russian Exporters under Foreign Trade Agreements (Contracts)." The document assumes the introduction of a requirement for the mandatory sale of foreign currency earnings by large exporters for six months. The government will set the volumes by separate order within 24 hours.

The decree also introduces an obligation for individual companies to submit plans and schedules for the purchase and sale of foreign currency on the domestic market to the Central Bank and Rosfinmonitoring. Authorized representatives of Rosfinmonitoring will be introduced into some companies; their tasks will include monitoring and ensuring compliance with currency regulation rules, the government press service said.

The Decree establishes a list of companies to which these measures will be applied. It includes 43 groups of companies "related to the fuel and energy complex, ferrous and non-ferrous metallurgy, chemical and forestry industries, and grain farming," the government said.