The Central Bank explained that the Russians will still be able to buy goods abroad in rubles and foreign currency
The regulator also noted that there are no special requirements for the mandatory sale of a part of foreign exchange earnings, it goes at the market rate
In accordance with the decree of the President of the Russian Federation Vladimir Putin, residents are not prohibited from making payments in favor of non-residents in rubles and in foreign currency for the purchase of goods abroad and payment for services. This is stated in the explanation of the Bank of Russia of the decree of the President of the Russian Federation on the application of special economic measures in connection with the unfriendly actions of the United States and the states and international organizations that have joined them.
“The Decree does not establish a ban on residents (individuals and legal entities, individual entrepreneurs, persons engaged in private practice, “self-employed” persons) making payments in favor of non-residents both in the currency of the Russian Federation and in foreign currency for the specified purposes,” they explain to the Central Bank on the possibility of buying goods abroad, paying for services, including those related to utility bills for real estate located abroad, paying for education, and medical services.
The regulator also indicated that from March 1, 2022, a ban was established only on the transfer of funds to non-residents in foreign currency both under newly concluded loan agreements and under loan agreements in force on the specified date. “The transfer of funds in foreign currency to a non-resident within the framework of the execution of existing loan agreements concluded before March 1 of this year is subject to immediate termination,” the Central Bank noted.
The regulator also clarified that foreign exchange transactions for residents to receive foreign currency when non-residents fulfill their obligations under loan agreements previously provided by residents to non-residents are not limited. This applies, among other things, to the operations of repayment of a loan by non-residents, payment by non-residents of interest and (or) penalties on such a loan.
The rate of mandatory sale of a part of foreign exchange earnings
The Bank of Russia said that there are no special requirements for the mandatory sale of a part of foreign exchange earnings; currently, such a sale is carried out at the market rate.
“Special requirements for the rate of mandatory sale of a part of foreign exchange earnings have not been established. Currently, such a sale is carried out at the market rate. Residents have the right to choose any method of such sale provided for by law,” the regulator said.
The Central Bank also explained that part of the foreign exchange earnings received from non-residents in any types (names) of foreign currencies is subject to mandatory sale.
The requirement for the mandatory sale of a part of foreign exchange earnings applies, among other things, to such foreign exchange earnings received from January 1, 2022, which, as of February 28, 2022, was placed on deposit by a resident.
The ban, as explained by the Bank of Russia, on the transfer of funds in foreign currency to their accounts opened with banks located outside the territory of the Russian Federation does not apply to Russian banks.
Decree of the President of the Russian Federation
On February 28, Russian President Vladimir Putin signed a decree “On the application of special economic measures in connection with the unfriendly actions of the United States and foreign states and international organizations that have joined them.” According to the document, residents – participants in foreign economic activity are obliged to sell 80% of the foreign currency credited to the accounts of participants in foreign economic activity in authorized banks on the basis of foreign trade contracts concluded with non-residents.
This requirement must be met no later than three working days from the date of crediting the foreign currency.
On February 24, Russian President Vladimir Putin announced a special military operation in Ukraine in response to the appeal of the leaders of the Donbass republics for help. He stressed that Moscow’s plans do not include the occupation of Ukrainian territories. After that, the US, EU, UK, as well as a number of other states announced that they were imposing sanctions against Russian individuals and legal entities.