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Currency and Export Control
The Government evaluates issues of the currency and export control as an important part of the
economic security of the Republic of Karelia that directly influences the socio-economic situation
in the republic. Thus, regulation in this sector becomes a question of political importance for the
Government. Matters of currency losses resulting from non-return of currency earnings from
abroad and losses resulting from inefficient and non-professional actions of exporters, in
particular in logging trade, take a special place in the system of the currency and export control.
Since the introduction of the currency control in Russia (1994) and up to January 1, 1999,
Karelian enterprises failed to return from abroad over 43 million US dollars, allowing that the
republic controls only 25% of all currency transactions made by exporters.
As a result of joint actions made by the Government, Committee on Currency and Export
Coordination of Public Agencies, Enterprises and Organizations, National Bank of the Republic
of Karelia, Karelian Division of the North-West Regional Currency and Export Control, and
customs departments, a positive change in repatriation of currency earnings has taken shape.
According to data from the National Bank, in the second quarter of 1999, currency non-
return rate decreased 20 times in comparison with the previous year.
Major reasons for currency earnings non-return the Government sees as follows:
- lack of exporters’ experience from the view of export contracts’ quality, which do not provide
for guarantee mechanisms of payments, penalties for payment delinquency, secure settlements,
etc.;
- excessive and not always justified trust of Russian exporters to any foreign company, and poor
development of the system of checking foreign buyers’ business solvency, etc. by the exporter,
especially if it comes to little known companies;
- possible personal selfish interest of the management of exporting enterprises which do not
return their incomes;
- absence of coordinated and effective currency control system in Russia, which would force
exporters to do their best to return earnings or, at least, to get a justification for the non-return.
The sphere of the currency and export regulation is, in accordance with the legislation of
the Russian federation, in competence of the federal centre and its agencies. Nonetheless, the
Government considers its main task in this sphere as consecutive and persistent
continuation of coordinating actions by federal currency control agencies in the Republic of
Karelia, with no duplication or interference with their competence.
The Government divides coordination in this sphere into several areas where actions will
take place.
At Russia’s level, establishment of a centralized information system has begun, which will
allow to obtain full information about all currency transactions by exporters and situation with a
delay or non-return of currency earnings regardless to where and through what bank it is
conducted. But conditions for swift obtaining information on enterprises in question are not
created yet. In addition to this, the system does not yet allow to have all needed information about
currency indebtedness of republic’s enterprises, especially this concerns enterprises which have
currency accounts only outside Karelia. Thus, the Government finds its task in getting federal
agencies to improve the centralized system of information exchange with regard to specific
exporters.
The Government makes a note that the legal basis of the currency and export control needs
further development. Therefore, initiative work with the Centre on improving the legal basis is the
second challenge of the Government in this sphere.
Work with individual exporters becomes one of the leading methodical principles and
areas of the Government’s activity. Analysis of exporter’s business, contract practice, violations
or drawbacks in the sphere of currency and export transactions will afford a basis for conclusions
to be taken as implications in improving the coordination of the currency control system in
general. Another task for the Government that comes forward in this regard is to force, through
pressure within the legislation and Government’s competence, exporting enterprises to take
measures to have currency earnings returned or justified at the inter-sectoral committee. Such
measures of pressure is, for example, introduction of the practice of refusal to careless exporters
in some kinds of licensing or allocating forest resources. Besides, a database is being established
on those managers of exporting enterprises who, when in the position of managers of enterprises,
violated the currency legislation, so that later they were forbidden from the public service,
positions of external managers of enterprises, directors of state enterprises.
An important prevention area regarding both non-return of currency earnings and
inefficient export is to continue by the Government improve in the system of registration and
examination of export contracts on lumber and some other significant export goods, and to
arrange a system of practical seminars and business meetings with exporters.
The quality of foreign trade contracts, level of export prices, liability of a foreign partner,
availability of necessary payment guarantees and liabilities of a foreign partner, expert’s
assessment of the quality and quantity of exported goods should become the point of special
attention.
One of activities, as the Government sees it, may become work with foreign companies in
debt, if these debts are quite considerable for the republic and have been proved with the help of
exporters themselves. The Government will go on seeking possible ways to influence foreign
debtors to retrieve currency earnings.
The main mechanism in implementation of tasks in this sphere is, according to
Government’s vision, the Coordinating Committee on Public Agencies, Enterprises and
Organization in the Sphere of Currency and Export Control established by Resolution #903 of the
Chair of the Government of the Republic of Karelia of December 30, 1998.
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