There is no need to reinstate capital controls as the sanctions pressure has eased, the CBR says
© Getty Images / Hans Neleman
The Central Bank of Russia (CBR) does not consider it necessary to return to the repatriation of export earnings, the head of the regulator, Elvira Nabiullina, stated on Wednesday.
According to her, currency controls should protect against sanctions pressure, but not interfere with the country’s foreign economic activity. “And that’s the balance we’re striving for,” Nabiullina said.
“As for the need to return to the repatriation of export earnings and other foreign exchange restrictions, in our opinion, this should not be done. The fact that our companies leave the proceeds abroad allows them to pay for the necessary imports,” she said, addressing the State Duma.
Nabiullina noted that anti-crisis measures are a powerful “medicine,” but they have “side effects,” which means it is necessary to stop using them as soon as we can manage without them.
Last year, the Russian government introduced strict controls on capital movement, including the mandatory sale of 80% of forex earnings, in response to Western sanctions on the country. Exporters were required to sell foreign currency credited to their accounts with authorized banks in the amount determined by a presidential decree.
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In order to expand the ability of exporters to manage foreign currency liquidity, the CBR later decided to ease the requirement for the mandatory sale of foreign currency to 50%. The regulator took another step toward liberalizing the currency regime, scrapping all the restrictions last June.
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