Page 60 - RusRPTNov18

from the banking system and $1.2bn from Sberbank alone and have withdrawn a total of $5.9bn since the start of this year. A corresponding increase in ruble deposits was not seen, suggesting people are holding these dollars in cash.
Foreign currency deposits with Sberbank have declined by some 10% this year and the share of foreign currency in the total deposits with the state-owned lender is down to 29%.
The Russian population is becoming nervous about the safety of their currency deposits and are withdrawing their money from banks. The trend is still mild: total FX deposits are down from $32.5bn to $31.7bn this year. But the continuous outflow can't be solely attributed to the need for foreign cash in the holiday season.
According to sources of The Bell and Vedomosti d aily, the government's plan is not coercive and it will not force the switch to ruble-denominated external trade, but rather seeks to encourage and facilitate the switch with a series of incentives such as easier currency controls, tax breaks, accelerated VAT refunds for ruble transactions and a liberalisation of currency legislation.
Siluanov also suggested that by 2024 strict rules for repatriating foreign revenues by exporters could be relaxed for those companies that settle transactions in rubles, as reported by Tass on October 4. Sanctioned Russian companies h ave already had currency controls eased by the government, with the penalties for not repatriating export revenues lifted for the companies on the US Specially Designated Nationals And Blocked Persons List ( SDN List) .
The Finance Ministry also suggested that sanctioned companies are freed from the obligation of using Russian correspondent banks for exports transactions. According to RBC business portal, new amendments to currency control rules were designed after complaints of Power Machines (Silovii Mashini) or metals tycoon Alexei Mordashov. The company has been sanctioned for its exposure to business in the annexed Crimea peninsula and reportedly has $100mn of exports revenues from a Vietnam power station contract blocked in the banks.
Russia and Kazakhstan may raise the share of settlements in national currencies to 75% from the current 63%, Deputy Economic Development Minister Sergei Gorkov at a meeting of the intergovernmental commission on cooperation between Russia and Kazakhstan on October 26. Earlier he said that historically CIS countries and the Eurasian Economic Union (EEU) member-states rank the first in terms of settlements in national currencies with Russia, virtually followed by China. After the meeting of the intergovernmental commission Siluanov told journalists that the plan is to achieve the announced targets within the next 1-2 years. “Today around 60% of all payments (between Russia and Kazakhstan) are made in national currencies, which is beneficial to our enterprises, our participants of foreign economic activities," he said, adding that the plan is to "bring that indicator to over 70%."
60 RUSSIA Country Report November 2018 www.intellinews.com