Russia is wary of imposing capital controls in the face of
upward pressure on the rouble despite fears that an
appreciating currency could damage its industrial base, deputy
finance minister Dmitry Pankin said on Saturday in Zagreb.
He said capital controls could help to depress
the rouble and fend off currency speculation, but added that
the negative effects also have to be borne in mind.
Any decision on capital controls would be taken in the first
instance by the Central Bank, Pankin added.
Russian policy in recent years had been to lift controls,
and this has stimulated inward investment, Pankin
said at a briefing. However he said that policies on exchange
rates and fighting inflation would have to be balanced with
Pankin said the rise in the crude price above an assumption
of $58 a barrel meant that with revenues from oil much higher
than expected, discussions on amending the budget centered
on whether to keep the deficit at the planned level of 6.8% of
GDP or bring it down to around 5.5%. Brent crude closed last
week just below $78. However Pankin said the general
direction is clear - to return to a balanced budget by
A final decision on issuing a sovereign bond this year is
now unlikely before September, Pankin said, adding that the
volume would probably be around $7.5 billion. The idea of
issuing paper for the world markets denominated in roubles is
interesting, and we are now analyzing the pluses and
Meanwhile a senior Russian economic development ministry
official delivered a disarmingly frank assessment this weekend
of the perils of doing business in the country to a seminar at
the EBRD annual meetings.
Dmitry Kvitko, deputy head of the ministrys investment
policy department, said the most forbidding barriers to
entrepreneurship and foreign investment were migration rules;
construction permit procedures; accessing municipal
infrastructure; and customs and tax procedures.
The migration rules obstruct both Russian and foreign
businesses trying to bring in highly-qualified foreign staff,
He said the construction permit problem had best been
illustrated by Komatsu, the heavy equipment manufacturer, which
had had to generate a three-metre long set of documents to get
approval to build one plant.
Such procedures were complex and bureaucratized,
Kvitko complained, while businesses trying to access gas,
electricity and other municipal services faced
untransparent obstacles and corruption.
The director of Russias flagship PPP project made
almost identical complaints about the business environment.
Sergey Emdin of Northern Capital Gateway, operator of the
modernisation project at Pulkovo airport in St Petersburg, said
his company had taken operational control of the airport two
weeks ago but still had not found all the documentation it