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. Last Updated: 07/27/2016

Putin Opposes Move On Exporters' Cash

Acting President Vladimir Putin on Tuesday dismissed the Central Bank's proposal to force exporters to convert all their hard-currency earnings into rubles.

"There is no such question on the government's agenda," Putin told reporters while attending the opening session of the new State Duma, the lower house of parliament.

"I'm always wary when I hear talk of giving something away to the state. The government's economic policy will be moderately liberal," Putin said.

The proposal to force 100 percent conversion of currency revenues into rubles instead of the present 75 percent was made by Central Bank chairman Viktor Gerashchenko.

Gerashchenko argued the step was necessary to help prop up the ruble, prevent runaway inflation in 2000 and stave off a major revision of the 2000 budget. The current law allows exporters to retain 25 percent of revenues in hard currency to make equipment purchases abroad.

"We understand that no country in the world gives its exporters any currency except for its own," Putin said. "But we must stay on the same ground on which we are functioning today."

Still, Putin indicated the Central Bank's proposal had not been ruled out completely.

"Such questions cannot be discussed at high speed. If we consider them, it should happen without bustle, in a calm manner while weighing all pros and cons," he said.

Boris Kaimakov, a spokesman at Sibirsky Aluminum, one of Russia's top aluminum exporters, said, "it wouldn't have been tragic" if the government had decided to tighten the currency law. However, he said such a step would not be good for business.

Russia first increased the amount of hard currency subject to mandatory sale to the state from 50 percent to 75 percent after the financial crisis in 1998. At the time, few companies were voluntarily buying into the plummeting ruble.

If implemented, Gerashchenko's plan could widen the gulf between Russia's policies and International Monetary Fund demands of increased economic liberalization.

The IMF opposes all currency controls as inhibitions to economic growth.

The Fund has already suspended its $4.5 billion loan program, saying that Russia has not implemented sufficient reforms. Any government decision to increase the mandatory hard-currency sales could further delay the loan program.

Meanwhile, Finance Ministry spokesman Pyotr Afanasyev said Tuesday the government had made loan payments of $371 million to the IMF this month. Russia insists it will keep up with its payments to the IMF even if the Fund doesn't free up its loan program.

Finance Minister Mikhail Kasyanov said in an interview published Tuesday the loan payments were pushing the government to look for ways to increase revenue.

He said the government would have to pay foreign lenders $3 billion in the first quarter of 2000 alone.

In the interview with the business daily Kommersant, Kasyanov said the government may try to boost revenues with privatization sales.

He did not mention other possible sources of money for the government.