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. Last Updated: 07/27/2016

Importers, Analysts Denounce Measure to Stem Capital Flight

Businessmen said Monday that a new Central Bank regulation designed to stem capital flight will simply add another level of state control over foreign trade and will be an obstacle to imports.

The Central Bank on Friday said importers must provide proof that imports will be delivered before foreign-currency payments can be transferred abroad. The move, the bank said, was prompted by illegal capital flight of $300 million to $400 million per month through fraudulent import deals.

But analysts said the new regulation is likely to hit importers of food, medicine and clothes, raising prices and eating into profits. Importers contacted Monday blasted the measure as costly.

"Extra control will cost us time and money," said Vladimir Gorbunov of major food importer Soyuzplodoimport. "It only makes sense if goods are imported by a state-owned company to cancel someone's debt to Russia."

Viktor Kaminsky of Sudoimport, a ship importing company, said the new regulation was just another attempt by the Central Bank to "tilt at windmills."

The Central Bank also came in for criticism from Andrei Illarionov, director of the Institute of Economic Analysis.

"The new instruction is absurd and absolutely worthless," he said. "It is impossible to make commercial banks check all import transactions. Any attempt to do so will cause extra corruption."

Bankers, however, were more upbeat about the move."This is far better than intrusive ways of regulating import," said Charles Blitzer, chief economist at the World Bank in Moscow.