The government plans to push the state-owned enterprises (SOE) into increasing the amount of international transactions they settle in rubles as part of the on going effort to reduce the use of the US dollar, the Minister of Finance Anton Siluanov said at the Rossiya 24 TV channel, without specifying the scope and timing of the effort.
Siluanov’s comments follow reports that the government is designing a package of measures aimed at lowering Russia's dependency on US dollar and facilitating ruble transactions, especially in cross-border trade.
At the same time in another interview to Rossiya 1 channel Siluanov said that "circulation and savings in [the US] dollar is the [free] choice of every citizen", adding that no one should "run to the banks and withdraw currency."
Russian have recently being exactly that, especially following comments by VTB CEO Andrei Kostin suggesting that dollar deposits maybe forcibly converted into rubles in the event of harsh new sanctions imposed on Russia by the US this autumn.
In August depositors pulled $1.5bn from the banking system and $1.2bn from Sberbank alone and have withdrawn a total of $5.9bn since the start of this year. A corresponding increase in ruble deposits was not seen, suggesting people are holding these dollars in cash. Foreign currency deposits with Sberbank have declined by some 10% this year and the share of foreign currency in the total deposits with the state-owned lender is down to 29%.
The government is merely "liberalising external trade, liberalising economic transactions within the country," the Finance Minister stressed. According to sources of The Bell and Vedomosti daily, the government's plan is not coercive and it will not force the switch to ruble-denominated external trade, but rather seeks to encourage and facilitate the switch with a series of incentives such as easier currency controls, tax breaks, accelerated VAT refunds for ruble transactions and a liberalisation of currency legislation.
Last week Siluanov also suggested that by 2024 strict rules for repatriating foreign revenues by exporters could be relaxed for those companies that settle transactions in rubles, as reported by Tass on October 4.
Sanctioned Russian companies have already had currency controls eased by the government, with the penalties for not repatriating export revenues lifted for the companies on the US Specially Designated Nationals And Blocked Persons List (SDN List). Last week the Finance Ministry also suggested that sanctioned companies are freed from the obligation of using Russian correspondent banks for exports transactions.
According to RBC business portal, new amendments to currency control rules were designed after complaints of Power Machines (Silovii Mashini) or metals tycoon Alexei Mordashov. The company has been sanctioned for its exposure to business in the annexed Crimea peninsula and reportedly has $100mn of exports revenues from a Vietnam power station contract blocked in the banks.
However, amid the talk of limitations on the US dollar in the economy, the Russian population is becoming nervous about the safety of their currency deposits and are withdrawing their money from banks.
The trend is still mild: total FX deposits are down from $32.5bn to $31.7bn this year. But the continuous outflow can't be solely attributed to the need for foreign cash in the holiday season.
In the meantime the government will extend the support to holders of FX-denominated mortgages, Vedomosti daily reported on October 4 citing the decree signed by PM Dmitri Medvedev. Additional RUB732mn will be granted from the federal budget for the program, which was put in place in 2015 with RUB6.5bn already spent on supporting 20,000 mortgage holders.