Russia introduces mechanism for national currency payments for agricultural export

Russia is introducing a mechanism for payments for agribusiness exports in national currencies as of November 1 under a presidential decree, Azernews reports, citing Interfax.

The decree "On the special procedure for conducting settlements on foreign trade contracts for delivery of Russian agricultural products" was signed and published on August 8, 2023 and went into effect on the date of its official publication, with the exception of provisions for opening special accounts and the settlements mechanism, which went into effect on November 1.

The decree provides for the use of special Z-type ruble accounts and special Z-type foreign currency accounts for settlements on foreign trade contracts for deliveries of Russian agricultural products signed by resident exporters with foreign buyers in organized trading. These accounts will be opened at the request of foreign buyers by credit institutions that are authorized banks under the law on currency regulation and control. Banks will be able to open such accounts without the presence of a representative of the foreign buyer.

Foreign buyers will transfer funds to the "Z" accounts in foreign currency, after which they will sell the forex to the authorized bank or instruct it to sell the forex in organized trading. The bank, in turn will deposit funds in rubles to the foreign buyer's "Z" account and, based on their instructions and entries from the registry of contracts signed in organized trading, transfer the funds in rubles to the account of the resident exporter.

The decree prohibits the suspension of transactions on "Z" accounts and the freezing or debiting of funds in them for the fulfillment of a foreign buyer's obligations that are not related to settlements on the foreign trade contract for the delivery of Russian agricultural products. An exception is made for cases stipulated in the Russian Tax Code and the August 3, 2018 law "On customs regulation in the Russian Federation and amendments to certain legislative acts of the Russian Federation."

The president has given the board of directors of Russia's Central Bank the authority to establish the rules for both types of "Z" accounts. The government was instructed to approve a list of agricultural products that will be sold under this arrangement.

Under a government resolution signed on October 24, the list includes pork, poultry meat and edible by-products, milk and cream, barley, corn, wheat and meslin, soybeans, flax seeds, sunflower, soybean and rapeseed oils and sugar, as well as cake and other solid residue from extraction of fats.