Page 49 - RusRPTJune18

building up reserves of foreign assets that caused the high outflow figure. Previously the Higher School of Economics (HSE) argued that due to the latest round of US sanctions net capital outflow from Russia will beat the forecasts and reach $49bn. While Russia's current account posted strong results in the first quarter of 2018 due to oil prices supporting solid trade balance, much higher capital outflow should be watched out for. Given no major geopolitical escalation, "the strong current account and moderate net capital outflow warrant a return of the ruble exchange rate to the fair levels of RUB55-60" per US dollar, Alfa Bank suggested on April 11.
7.1 FX issues
The government has agreed to the Ministry of Finance’s proposal to loosen currency controls , allowing companies sanctioned by the US and its allies to opt out of repatriation of export revenue. For non-sanctioned companies, the fine for failing to repatriate export earnings will be lowered, Russian exporters have long complained that the requirement to return proceeds to Russia presents one of the biggest obstacles to business. Currently, failure to repatriate earnings racks up a fine of 1/150 of the central bank’s key interest rate (7.25%) of the unreceived amount for each day delinquent. (That’s roughly a.05% fine.) However, if the money is never received, the penalty falls between 75-100%. Finance Minister Anton Siluanov first proposed cancelling this requirement in late 2017 . At the time, the government rejected the proposal. However, the Duma has since changed its stance with the introduction of the latest round of American sanctions on April 6. Sanctioned companies now will be able to settle accounts with their counterparties and receive revenue in foreign bank accounts to spend and use as they see fit.
49 RUSSIA Country Report June 2018 www.intellinews.com