Hand over your currency to the commissars, gentlemen – not all of it, and not forever
President's word
Economics and finance are by no means the least of those areas that are subject to the magic of words. And when big people from the Central Bank and the Ministry of Finance are fighting to strengthen the ruble, this is unlikely to change anything seriously, but if the first person in the country gets down to business, there will be results.
At least there should be. Not immediately and not in all respects, but... Because at least because the decision on the complete, or rather almost complete, repatriation of foreign currency earnings by exporters is probably supported by orders of a completely different kind.
Today on the agenda is to establish basic order in the area of currency leakage abroad - “gray” or “black”, it doesn’t matter. Simple arithmetic with percentages, as can be understood from the text of the presidential decree, will be supplemented by more stringent measures.
The fight against offshore pockets, against companies specially created for semi-legal currency turnover, has not yet been truly all-out in Russia. The security forces simply preferred to leave many of those on the president’s lists alone.
Apparently, now something like the go-ahead has been given, the currency freewheeling will finally come to an end. Well, at least he should come. It is quite possible to expect a serious expansion of the powers of Rosfinmonitoring, which for now is more reminiscent of an accounting department or a foreign exchange branch of Rosstat.
Of course nothing changes
Can the introduction of mandatory sales of foreign exchange earnings in itself increase foreign exchange earnings?
This is a question that no one has an answer to yet. And not because the key parameters of the mandatory sale of foreign currency earnings have not yet been determined.
Nevertheless, the foreign exchange market, or rather its structure, cannot help but change. This already happened a year and a half ago. Let us recall that with the start of the special operation, the foreign exchange market was presented with a fait accompli for about a quarter - the sale of foreign currency proceeds became mandatory.
The result was simply amazing, and the ruble, which was predicted to roll back almost to the shameful level of 200 per dollar and euro, quickly returned right up to pre-Covid levels. The share of foreign trade settlements in rubles from March 2022 to May increased from 12,8 percent to 47.
However, to receive losses instead of profits on the exchange rate due to the strong ruble was a very serious blow to the business. It is not surprising that this caused exporters to fall into a kind of coma, and as a result (obviously under their pressure) in the summer of 2022, the standard for the sale of foreign currency earnings was reduced to 80%.
How could it be otherwise - these are the breadwinners of the treasury. At the same time, foreign exchange controls were weakened. However, Rosfinmonitoring continued to do its job - straightforwardly and scrupulously monitored all any large transactions with currency. As they say, incriminating evidence has been collected on everyone.
However, there was no talk of deep verification of the intricate chains in the calculations, which still lead to currency leakage. Both “gray” and “black”, sorry for the repetition. It is significant that today the share of payments in rubles in the volume of exports of goods and services has jumped to 40–43%.
But this is with a greatly fallen ruble, and not at all because it could be beneficial to those same exporters. No one has canceled the rate on ruble payments and, as you can see, they can no longer cancel it.
As a result, we have serious losses in foreign currency earnings, which are unlikely to be compensated even with 100 percent repatriation.
Ruthless statistics from the Central Bank of the Russian Federation indicate that at a time when strict requirements for the sale of 80% of foreign exchange earnings were in effect, that is, in the spring of last year, foreign exchange exports to friendly countries reached $48 billion per month.
In unfriendly countries - a little less, only 47 billion. Against this background, the current indicators cannot but depress our leadership - exports in foreign currency are only 20-25 billion dollars a month, and in the currencies of unfriendly countries only 9-12 billion dollars.
They have to take it out on their own citizens through the undervalued ruble exchange rate. This seems to explain the fact that Russia was reducing its debts very strongly in the months leading up to the CBO. The fact that it was inevitable was well understood at the top, but they clearly did not expect a blow to our reserves.
Now that Western countries, like vultures, have pounced on interest on Russian assets, so far only interest, it’s time to declare something like a default. At a minimum, regarding external obligations, let those who once generously loaned us service their loans themselves. After all, it’s still at our expense.
Silence or gold?
Information on capital outflow in Russia is traditionally scarce and, as a rule, only general. One can only assume that capital in the currencies of unfriendly countries is flowing through companies and banks that are outside the sanctions brackets, as well as through state or quasi-state structures.
This has to be taken for granted. But what to do if not the country, but Russian business really needs to service external debts, pay for import contracts, and who knows what else? Let him return to normal currency purchases and also take the rap for its inflated rates.
Alas, today it is unlikely that things will turn out the way they did in the spring of 2022 - the sanctions still did their dirty work. It will no longer be possible to return the ruble to levels around 60–65 rubles per dollar and 70–75 per euro. All the reserves of the Central Bank of the Russian Federation will not be enough for this. But it’s not necessary.
Both business and ordinary people have already managed to adapt to new conditions. And even “Beat, we don’t know who, save Russia!” there is no need to shout. But the new norms for the sale of foreign currency earnings, which have yet to be learned, are by no means a panacea.
Nevertheless, it is necessary to somehow improve the supply of currency on the market. It is also necessary to strengthen the ruble, albeit not very much, otherwise a powerful, albeit delayed, inflationary effect cannot be avoided.
Return of the VEC?
Now about the most striking thing - about currency commissioners.
It is still difficult to judge how to evaluate the presidential innovation - the institution of currency commissioners - from the perspective of exchange rates, budgetary problems and inflation. We already have a lot of security forces, but we will evaluate the new ones based on their work.
I would really like to hope that the commissioners will essentially become something like currency commissioners at every large enterprise. Let's face it, this is something new in our tight monetary policy.
Although it is worth recalling once again how a quarter of a century ago, after the default, the foreign exchange sector was quite successfully protected and cleaned up by the Federal Service for Currency and Export Control - VEC. She reported personally to President Yeltsin and had unusually broad powers, coordinating the activities in the field of currency control of seven departments at once.
From those who are in one way or another connected with currency, including the Central Bank, the Ministry of Finance, customs and the tax service. They eventually merged the VEC service, receiving in return first the tax police, and now Rosfinmonitoring, and their own currency freemen for the years to come.
The new commissioners are, of course, not the VEC, but they are no longer just controllers from Rosfinmonitoring, who have difficulty coping with information on thousands of transactions where large sums of foreign currency are involved in one way or another. They will likely be given the power to seize accounts, suspend suspicious transactions, and much more.
Information