Russia extends mandatory sales of a portion of exporters' forex revenues for a year

MOSCOW. May 23 (Interfax) - The Russian government, pursuant to a presidential decree, has approved a resolution to extend mandatory sales of a portion of forex revenues by exporters for another year, until April 30, 2026.

"The taken decision will ensure the predictability of the inflow of foreign currency onto the domestic market," the Cabinet said in a press release. Prime Minister Mikhail Mishustin signed the resolution on May 22.

Exporters on a list approved by a presidential decree, which is classified and not published, will be required to transfer at least 40% of forex revenues earned on foreign trade contracts to their accounts at authorized banks starting May 25, 2025, the government said. These companies will also be required to sell at least 90% of the forex transferred to accounts at Russian banks on the domestic market, but not less than 25% of the proceeds from each export contract, the press release said.

The basic parameters of the repatriation regime have thus remained unchanged. The previous versions of the decree and resolution were in effect until April 30, 2025.

Earlier this week a source familiar with the preparation of the document told reporters that the presidential decree extending mandatory sales of a portion of exporters' forex revenues had been signed. "The decree was signed on May 15. Now the [government] resolution [pursuant to the decree] is on the way," the source said.

Mandatory repatriation and sales of a portion of forex revenues by exporters was introduced in October 2023 for six months, and the decree was later extended for a year to the end of April 2025. The original decree and subsequent decrees that amended it were not published, as they are restricted because the list of exporters is classified. The details of the regime imposed by the decree are regulated by a government resolution.

Exporters were initially required to transfer at least 80% of forex earnings from foreign trade contracts to their accounts at authorized banks and sell at least 90% of this amount on the domestic market. In June 2024, the government announced that this threshold would be reduced from 80% to 60% and in July it was lowered to 40%, meaning exporters had to sell at least 36% of forex revenues on the domestic market. Initially, there was a stipulation that at least 50% of proceeds (regardless in which currency) from each export contract had to be sold within 30 days of when they were received. This threshold was lowered to 25% in October 2024.

Finally, another change concerns clearing. The government issued a resolution in December under which a government commission can grant exporters permission to not transfer forex to authorized banks in the amount required to fulfill the repatriation requirements.

Deputy Finance Minister Alexei Moiseyev said in early March that his ministry was proposing to extend the decree for another year while clarifying a number of provisions. However, the ministry does not see any need to change the basic parameters of the existing regime, as exporters continue to more than fulfill the requirements of the decree, he said. Exporters are exceeding even the current requirements and the strengthening of the ruble is not related to the decree, Moiseyev said.

At the same time, government agencies discussed updating the list of exporters subject to the decree by excluding several companies that earn forex revenue in symbolic amounts and adding companies with substantial export streams, a source told Interfax.

The Central Bank of Russia (CBR) opposed extending the existing regime in the current situation, Moiseyev said. "The government supported [the extension], the Bank of Russia has concerns. They believe that we shouldn't extend in the current situation. We are now working all this out," he said on April 16.

Since then there had been no official comments on the fate of the expiring decree. Central Bank chief Elvira Nabiullina only said at a press conference on April 25 that the CBR did not factor any fate of the decree into its updated macroeconomic forecast, because it believes this has absolutely no impact on the exchange rate.

"We did not consider the factor of the extension or non-extension of the decree as a factor in our decision either now or before, because we believe that the extension or non-extension of the decree does not affect the dynamic of the currency exchange rate," Nabiullina said. CBR data showed that since the start of the year exporters had been selling about 90% of their forex earnings on the domestic market, far more than the 36% required by the last version of the government resolution.

"We see this in reality. Regardless of how the requirements for mandatory forex revenue sales changed last year, on average our exporters sold up to 85% of forex revenues and now we're seeing something around 90% of forex revenue being sold for two months, despite the fact that the requirements to sell are far lower. Therefore, this factor was simply not considered [in the update of the CBR's macroeconomic forecast]," Nabiullina said.