Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Official Says New Currency Duty Likely

A proposed new customs duty on foreign currency imports is still in the discussion stages but could be introduced as soon as the end of this month, a Central Bank official said Monday, sparking concern among commercial bankers about the potential revival of a currency black market.

Details of the plan remain vague. Prime Minister Viktor Chernomyrdin said last week in remarks to State Tax Service officials that a tax on cash imports could help raise money for the beleaguered budget, but he gave no details of when the new duty might start or how it could work.

"If buying dollars legally becomes more expensive, then people will just go and buy them on the black market," said Maxim Yurevich, head of client services at Most Bank in Moscow.

Possible terms of the new customs duty on hard currency, which are still under discussion, could apply to both banks and individuals, said Natalia Khomenko, a Central Bank representative.

"Although it is forbidden to pay in dollars in Russia, everybody does it. So a tax won't make people use fewer dollars," said Yurevich, who said the difficulty of controlling Russia's currency markets makes fertile ground for black markets to develop.

He said the duty would affect dollars more than any other hard currency because dollars are the currency of choice for the vast majority of Russians.

Pavel Nefidov, Tokobank's executive vice president, said the important demand for dollars in Russia would encourage his bank to keep on buying them despite the potential duties on their import.

"Although dollars will become more expensive, as long as there is a market, we will continue to buy them," he said.

Russia imported approximately $15 billion to $20 billion in 1995, and trends suggest the number will be even higher this year, Khomenko said.

Most Bank and Tokobank representatives said consumers would end up paying most of the currency duty as it was passed on to them in the form of higher commission charges at currency exchange points.

Yet Nefidov said more expensive dollar bills would not significantly affect the ruble exchange rate "because the market is now stable enough."

Although the government is anxious to collect badly needed revenue, Nefidov said he didn't expect a hard currency duty to be high if one is adopted.