Media Learn How Emergency Meeting Convened By Putin Ends
- 17.08.2023, 8:59
They discussed the situation with the Russian ruble.
Putin agreed with members of the Russian government and Central Bank head Elvira Nabiullina not to set norms for the sale of foreign currency earnings by exporters and not to impose restrictions on capital flows amid the ruble's devaluation.
This issue was discussed at Putin's meeting with officials on the evening of 16 August, two sources familiar with the meeting told Vedomosti. According to them, tightening currency controls was recognised as an "extreme measure" that could affect the exchange rate, but only temporarily.
Instead, the government informally agreed with exporters to increase the sale of foreign currency earnings. This is especially true for non-energy companies, one of the interlocutors pointed out. He explained that the oil sector has to sell most of its export earnings because half of the proceeds go to taxes. It is mainly the fertiliser producers who ignore the return of revenues to the country, the source claimed.
According to another source, if the situation does not change, forced sales will become inevitable. An increase in the tax burden is also possible. "It is unlikely that companies will be eager to sell more revenue to pay taxes," he added. The participants in the meeting with the president identified the main reason for the ruble's fall as the loose monetary policy, which led to an excessive increase in the money supply. On 15 August, the Central Bank tightened monetary policy by raising the key interest rate from 8.5% to 12% per annum.
According to the Financial Times, Finance Minister Anton Siluanov went to a meeting with Putin with a proposal to require exporters to sell up to 80% of foreign currency earnings within 90 days of receipt and to deny state subsidies to companies that refuse to comply. According to Reuters, almost all export currency - up to 90% - could be subject to compulsory sale.
The authorities first forced exporters to sell 80% of foreign currency proceeds after the war in Ukraine, which led to the collapse of the ruble. In May 2022, the norm was reduced from 80% to 50%, and a month later the volume of currency sold on the market was determined by the Committee for the Control of Foreign Investments.
On 14 August, the dollar exceeded Rb100 and the euro Rb110. After the increase in the key interest rate and reports about the presidential meeting on tightening currency control, the ruble strengthened to 94 rubles per dollar and 102 rubles per euro.