| The foreign exchange regulation law finds new fans The long-suffering bill on currency regulation is gradually taking shape that more or less suits all interested parties. At least the main opponents on the issue of liberalization of currency legislation - the Ministry of Economic Development and Trade and the Ministry of Finance - demonstrated complete agreement yesterday. Speaking at the RUIE conference dedicated to this topic, Minister of Economic Development German Gref emphasized that he was speaking with the agreed position of the entire economic bloc of the government. True, Finance Minister Alexei Kudrin, who was invited to the conference, was unable to come or send any of his deputies due to some “force majeure” circumstances. According to Mr. Gref, the government’s approach provides for an almost free regime for current operations, as well as, if restrictions are not introduced, for capital ones. Restrictions may be introduced in the event of sharp fluctuations in the exchange rate of the national currency or a threat to the balance of payments. The mandatory sale of foreign currency earnings remains at 30%.
Even the first deputy chairman of the Central Bank, Oleg Vyugin, admitted that currency regulation is not an effective way to control the movement of capital. In his opinion, the main problem in carrying out liberalization may be the state's budget policy. “Nothing threatens the stability of the national currency if the Central Bank is not forced to lend to the government,” Mr. Vyugin emphasized. The law on currency regulation, as Mr. Vyugin lovingly noted, only “looks very formidable, but if you read the law carefully, you can see that this is the formidable face of a good dad.”
According to the bill, its validity period is limited: on January 1, 2007, currency regulation will be completely terminated. Moreover, Deputy Minister of Economic Development Arkady Dvorkovich said that the Ministry of Economic Development and Trade is in favor of reducing the terms of currency regulation. A study conducted by the ministry showed that reducing the deadline for lifting restrictions does not threaten the Russian economy. On the contrary, if restrictions are lifted, then both ruble and foreign currency assets will only grow.
The Central Bank strongly disagrees with this statement. Deputy Chairman of the Central Bank Konstantin Korishchenko, in response to Dvorkovich’s words, said that Russia still lives on raw material exports. And the ruble is not “a strong enough currency for radical liberalization.” For these reasons, it is necessary to maintain the norms of repatriation and mandatory sale of foreign currency earnings at least until 2007.
It seems that the government version has two obvious opponents left: presidential adviser Andrei Illarionov, having switched from criticizing Anatoly Chubais alone, smashed all the arguments in favor of the law to smithereens, and the general director of OJSC OMZ Kakha Bendukidze, who wrote his own version of the law, recently submitted to the State Duma on behalf of members of the Duma Committee on Property. The Bendukidze-Pleskachevsky bill proposes the complete elimination of the mandatory sale of foreign currency earnings, an exclusively notification procedure for all foreign exchange transactions, and limiting the ability of the Central Bank and the government to introduce emergency measures.
How much the parties are really ready for a compromise will be revealed by today's government meeting, at which the parties will once again try to approve the agreed upon option.
Vladimir Potanin, president of the Interros holding company, shared his opinion on the new currency legislation with the Vremya Novostey newspaper:
-- The government bill finds a balance between the interests of businesses, primarily small and medium-sized ones, for which any unnecessary approval is a problem, and the interests of the Central Bank, which needs to have regulatory powers.
The criteria by which restrictions can be introduced are outlined quite specifically. In my opinion, it is obvious that the concept of a significant threat to the country’s balance of payments cannot be spelled out in detail in the law, but nevertheless we proceed from the fact that both the government and business employ people who understand what this concept means. Introducing an alternative bill is a formalization of the business point of view. It is easier to compare two documents to reach a compromise than to explain things on your fingers. We do not set ourselves the task of ensuring that this particular option passes.
In my opinion, the law must be adopted without haste, given that this document has already set the direction for the movement of currency legislation and determined that the liberalization of currency regulation will occur after a clearly defined transition period. In addition, it is necessary to decide whether this document will be a law of direct effect. Interviewed by Vera SITNINA |
|
