Russian Finance Ministry: Currency Laws Hinder Development of Economic Ties

'Liberalizing currency laws will help to stabilize Russia's domestic market and attract foreign investment,' said First Deputy Finance Minister Alexei Ulyukaev today at a plenary session of the State Duma. Ulyukaev was reading a paper on the government's bill 'On currency regulations and currency control.'

According to Rosbalt's correspondent, Ulyukaev stressed that current currency laws 'have become outdated and act as a break on the development of Russia's foreign economic ties.' The ministry is, therefore, proposing to switch from system of currency control based on permission to one based largely on informing the authorities. In particular, the bill significantly reduces the number of capital transactions requiring regulation: only those which could damage the economy, destabilise the currency market or provoke an outflow of capital will remain regulated.

Limits on transactions will only be introduced to support the stability of Russia's balance of payments and to prevent sharp fluctuations in the exchange rate. All routine currency transactions will cease to be subject to controls, the minister underlined. Exporters will continue to be required to repatriate their foreign exchange earnings, although the percentage of compulsory foreign currency sales will be reduced to 30%. 'In our opinion, a complete end to repatriation would be premature, due to Russia's current balance of payments,' said Ulyukaev. However, from January 1, 2007 all restrictions set out in the bill will be abolished, the minister added.