This resolution was drafted by the Ministry of Finance to fulfill the Action Plan aimed at accelerating Russia’s economic growth, as approved by the Government of the Russian Federation on July 30, 2013, No 4571p-P13.
The signed resolution determines the procedure for single federal budget account balance management in regard to selling and purchasing foreign currency to be channeled into the Reserve Fund and the National Wealth Fund.
The resolution stipulates:
- to approve the Rules for transactions performed as part of single federal budget account balance management in regard to selling and purchasing foreign currency;
- to recommend to the Central Bank to draw up and submit to the Federal Treasury, within one month of the coming into force of this resolution, a draft bank account contract containing clauses on buying (selling) foreign currency, including restrictions on exchange transactions, and the rules for the accrual and payment of interest on the balance of bank accounts in foreign currency;
For the Federal Treasury:
а) to sign a foreign currency bank account contract within two months of the coming into force of this resolution;
b) to submit, on a regular basis, information on the sales and purchases of foreign currency to the Ministry of Finance in accordance with the procedure determined by the Federal Treasury and approved by the Ministry of Finance.
The Rules approved hereby determine the procedure and conditions for the sale and purchase of foreign currency as part of single federal budget account balance management.
In accordance with this resolution, to improve sovereign funds management and minimise foreign exchange risks, including negative exchange rates difference, the Central Bank hereby proposes that the Federal Treasury should use the single federal budget account balance to purchase and sell foreign currency (US dollars, euros and British pounds) from the Central Bank and not on the open market.
The acquired foreign currency should be deposited on the bank accounts that the Federal Treasury has opened with the Central Bank as per the bank account contract. Interest should accrue on these foreign currency accounts balance in the amount stipulated by the bank account contract.
The resolution also stipulates that the Federal Treasury should post the information on any planned purchase or sale of foreign currency (including the amount and date of the transaction) on its website before the transaction.
The sales and purchases of foreign currency are classified as financial assets transactions according to their economic nature and do not affect the federal budget execution results; therefore, the adoption and fulfillment of this resolution will not involve additional federal budget expenditures.
The implementation of this resolution will help create tools for supporting the federal budget account’s liquidity.
