Russian official comments on obligatory hard-currency sales

Russia's First Deputy Finance Minister Sergei Ignatyev said that he hoped members of parliament would not vote in favour of the Economic Development and Trade Ministry's bill calling for the elimination of obligatory hard-currency sales as of 2004. Reversing the government's policy of forcing exporters to sell a certain percentage of their hard-currency returns for roubles would expose the Russian economy to too much risk, Ignatyev said.
He stated, though, that the Kremlin was willing to reduce the share of revenues that had to be converted into roubles. Presently, he noted, exporters must sell 50 % of their hard currency. Within one to two years, he said, Moscow may cut this figure to 30-35 %.

After Russia plunged into a major economic and financial crisis in August of 1998, exporters were ordered to sell fully 75 % of their hard-currency revenues in order to support the government's efforts to shore up the rouble and boost hard-currency reserves at the Central Bank of Russia (CBR). Parliament deputies voted this summer to cut the figure to 50 %, saying that the CBR's gold and hard-currency reserves, which now amount to $ 38.5 bn, had risen to a safe level.
This move sparked strong criticism from Viktor Gerashchenko, the CBR's head. Gerashchenko said that the country's economy would not be adequately secure unless the bank's reserves rose to $ 40-45 bn. Obligatory hard-currency sales have a major impact on Russian oil and gas companies, which account for around half of the country's entire export revenues.