26 Jan 2024 09:47

Kremlin aide Oreshkin backs extension of mandatory forex sales for exporters

KALININGRAD. Jan 26 (Interfax) - The mandatory repatriation and sale of foreign currency earnings for leading Russian exporters introduced by presidential decree last fall has been an effective measure that has reduced market volatility and it makes sense to extend it, Kremlin aide Maxim Oreshkin said.

This requirement is set to expire on April 30, but this week the government said it will propose to extend it until the end of this year. The Central Bank is opposed to the extension.

The government, which initiated this measure last fall, "has done a very in-depth analysis of the consequences it has led to," Oreshkin told reporters on Thursday.

"You know, in line with the decree, the authority of the Federal Financial Monitoring Service was expanded accordingly. Information is being received from companies and it is obvious that this decision has led to excessive volatility disappearing from companies' transactions. This is what we were counting on, it's clear the measure is effective. Accordingly, for my part I will support the extension," Oreshkin said.

Asked if the requirements of mandatory forex sales might be eased at the same time that the measure is extended, he said the presidential decree initially included "all mechanisms to work out the nuances."

"Firstly, one must understand that the decree applies only to large exporters, it does not apply to all without restriction. And secondly, there is a mechanism that makes it possible to approach certain situations flexibly," Oreshkin said.

"We understand very well that in the current circumstances just such a strict measure cannot work, so there are a number of things that smooth out the sharp corners of how this mechanism works and the government is working on this. There is a commission headed by [Finance Minister] Anton Germanovich Siluanov that is authorized to consider such issues," Oreshkin said.

President Vladimir Putin signed the decree on "implementation of mandatory sales of foreign currency revenues earned by certain Russian exporters on foreign trade agreements (contracts)" in the middle of October 2023. It applies to 43 groups of companies in the "fuel and energy sector, ferrous and nonferrous metallurgy, chemical and forestry industries and the grain business." Under rules approved by the government, starting October 16 companies on the list must deposit at least 80% of all forex earned under their export contracts in their accounts at Russian banks within 60 days of receiving the funds. They must then sell at least 90% of the deposited forex on the domestic market within two weeks (but at least 50% of funds earned under each export contract within 30 days of receiving them).