RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/SPEC/RUS/25/Rev.2/Corr.1
27 June 2003
(03-3455)
Working Party on the
Accession of the Russian Federation
DRAFT REPORT OF THE WORKING PARTY ON THE
ACCESSION OF THE RUSSIAN FEDERATION
TO THE WORLD TRADE ORGANIZATION
Corrigendum1
- The attached table replaces Table 1 on page 157 of the Draft Report of the Working Party
(WT/ACC/SPEC/RUS/25/Rev.2).
                                                     
1 In English only.WT/ACC/SPEC/RUS/25/Rev.2/Corr.1
Page 2
Table 1
Exchange Restrictions on Current Currency Operations
(Based on the information received from the Internatio nal Monetary Fund with regard to the IMF Executive
Board meeting of 2 May 2003 to conduct the 2003 Article IV Consultation with the Russian Federation)
Background The Russian Federation accepted the obliga tions of Article VIII, Sections 2, 3, and
4 of the IMF Articles of Agreement with effect from 1 June 1996. Since then,
however, the Russian authorities have imposed a number of exchange measuresthat are subject to approval under Article VIII because they give rise to exchangerestrictions on the making of payments and transfers for current internationaltransactions and/or multiple currency practices. Most of these measures wereimposed in August 1998, in order to stem capital flight and stabilize the exchange
rate in the wake of the financial crisis. Over time, the scope and impact of these
restrictions have been reduced, and a number have been eliminated altogether.
The Russian authorities recently submitted a new draft Foreign Exchange Law to
parliament. If adopted in its current form, this law would open the capital account
significantly, and IMF staff expects that this would have a positive effect on
economic performance and trade. Fund staff will monitor developments in order toadvise the authorities and the Board on the implications of the new law and relatedregulations with regard to exchange restrictions and multiple currency practices.
Remaining exchange
restrictionsRussia’s exchange restrictions subject to approval under Article VIII of the Fund’s
Articles are as follows:
Conversion operations through non-residents’ S accounts. These are special
accounts for non-residents used for GKO-OFZ-related transactions. Beforebalances arising from such transactions can be repatriated, funds have to be
transferred to a non-interest bearing transit account for a fixed period. As a result,
the repatriation of interest earnings and other current proceeds from GKO/OFZinvestments would be made with delay and at unfavourable terms.Repatriation restrictions on ruble balances of non-residents not participating in the
GKO/OFZ novation. The rules governing the repatriation of ruble balances aresimilar to those described above with respect to the S-accounts. They apply to ruble
balances arising from GKO/OFZ investments, which matured before 31 December
1998.Restrictions on advance import payments. The authorities do not freely permit themaking of all advance payments that are required under valid import contracts.Use of a more depreciated exchange rate for repatriation of S-account balances.
Non-residents who participated in the GKO/OFZ novation are allowed to repatriate
part of the proceeds by purchasing foreign currency in special auctions arranged bythe CBR at a depreciated exchange rate.Restrictions on non-residents’ N-accounts. These are non-resident bank accountsused for trade and some bond-related transactions. Existing restrictions limit theability of non-residents to effect moderate amounts of amortization from the
proceeds of bond transactions.
Economic significance The above remaining exchange restrictions and multiple currency practices subject
to approval under Article VIII of the Fund’s Articles affect relatively fewtransactions, and do not have a significant impact on the balance of payments:
1. The limits on repatriation of interest payments affect modest amounts as the
stocks in these accounts have declined, while the holding period has also beenreduced.
2. The percentage of deposits that is required for advance payments on importsWT/ACC/SPEC/RUS/25/Rev.2/Corr.1
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has been reduced to 20 percent and applies to advance payments of more than
90 days. This affects only a small percentage of payments.
3. The number of special auctions that give rise to the multiple currency practice
has been reduced and they affect relatively modest amounts (several million
dollars in the recent auctions, with a premium of under 1 percent).
IMF Executive BoarddiscussionUnder Fund policy, the Executive Board generally may approve exchange
restrictions and multiple currency practices if it is satisfied that they are imposed
for balance of payments reasons, are not discriminatory, and their use will be
temporary while the member is seeking to eliminate the need for them (i.e.including a timeframe for removal).
The Executive Board did not grant approval of the exchange restrictions and/or
multiple currency practices listed above when it concluded the 2003 Article IV
consultation with the Russian Federation on 2 May 2003. In fact, the ExecutiveBoard, in concluding the consultation, encouraged the Russian authorities toremove the remaining exchange restrictions and multiple currency practices subjectto Article VIII. The Executive Board welcomed the new legislative proposals toliberalize foreign exchange transactions and urged the authorities to ensure that a
strengthening of the financial system and better enforcement of prudential norms go
hand in hand with liberalization. It considered that, in the current environment ofsizable capital inflows, the authorities should avoid introducing new controls.
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