On the Cancellation of Mandatory Sale of Foreign Exchange by Economic Entities
As part of ongoing work aimed at liberalizing foreign exchange relations, the requirement for mandatory sale of a part of foreign currency proceeds in the domestic foreign exchange market by legal persons and individual entrepreneurs, who are residents of the Republic of Belarus (hereinafter referred to as "economic entities"), is abolished. This decision was taken by the President of the Republic of Belarus.
Under the conditions of stabilizing the situation in the economy and financial sphere, as well as achieving a balance of supply and demand in the domestic foreign exchange market, in 2016-2017 the National Bank took consistent steps towards a gradual decline in the amount of mandatory sale of foreign exchange by economic entities: in September 2016, this requirement was decreased from 30% to 20%, in October 2017 – to 10%.
The National Bank’s phased reduction in the size of mandatory sale of foreign exchange earnings did not have any negative impact on the volume of foreign currency supply in the domestic foreign exchange market on the part of economic entities. With the compulsory sale requirement of 10% that has been in force until recently, economic entities actually sold more than 47% of their foreign exchange proceeds. The average daily sale of currency by economic entities under the conditions of a step-by-step decrease in the mandatory sale rate from 30% to 10% raised from USD62 million in equivalent in January-August 2016 to USD77 million in equivalent in October 2017 – June 2018.
These figures indicate that the volume of foreign exchange sold by economic entities is driven mainly by their need for Belarusian rubles to ensure economic activities (payment of salaries and taxes, purchase of components and materials, etc.), and this demand, in turn, depends on the level of business environment in the economy and the dynamics of the extent of economic activity.
Therefore, in the context of preserving current positive trends in the economy and financial sector, the decision on the complete abolishment of the mandatory sale of foreign exchange earnings will contribute to fulfilling the tasks set by the Head of State to improve conditions for doing business, stimulate business activity and create equal economic conditions for organizations of all forms of ownership. In addition, the cancellation of mandatory sale will improve the efficiency of the mechanisms of the domestic foreign exchange market functioning, which in the long run will contribute to strengthening the confidence in the national currency and expanding its use in settlements on the territory of the Republic of Belarus.
The cancellation of compulsory sale of a part of the foreign exchange proceeds will also become another step of the Republic of Belarus towards harmonization of foreign exchange legislation within the framework of the Eurasian Economic Union (EEU).
The Decree of the President of the Republic of Belarus "On the Cancellation of Mandatory Sale of Foreign Exchange" comes into force after its official publication. Thus, starting from the day following the date of publication economic entities are not obligated to sell foreign exchange earnings, including those received before the entry into force of this Decree of the President of the Republic of Belarus.