BOFIT Viikkokatsaus / BOFIT Weekly 2018/36

Russia's finance ministry has sought this year to ease the forex repatriation demands on companies involved in foreign trade, with several proposals turned down. At the end of July, however, an amendment eliminating the repatriation mandate for companies affected by Western sanctions was approved. Proposals to ease the repatriation requirement on all companies e.g. on ruble-denominated foreign trade earnings are still under consideration.

Under current legislation, firms are required to repatriate their foreign trade revenues. It is not required, however, that firms convert their earnings to rubles. This partly explains why about 30 % of corporate bank deposits in Russia are denominated in foreign currencies. CBR figures show that the largest export firms have typically converted over 50 % of forex earnings to rubles in order to pay e.g. wages and taxes. The rise in the export price of oil has increased export revenues, which are typically denominated in dollars, as well as ruble-denominated taxes and tariffs going to the budget. The finance ministry reconverts any surplus budget revenues back into foreign currencies before they are transferred to the National Welfare Fund.