MOSCOW, June 29 (RIA Novosti) - Russia's government approved legal amendments lifting currency restrictions and paving the way for a fully convertible ruble, the Cabinet's press service said Thursday.
The government's decision came as part of a plan to fulfill President Vladimir Putin's instructions to lift the remaining currency restrictions and make the ruble fully convertible by July 1, outlined in his state of the nation address to parliament on May 10.
The government said it had approved the bill drafted by the Finance Ministry and would submit it to the lower house of parliament, the State Duma.
In the run-up to the target date, the government has been gradually easing restrictions on capital flow and currency export operations, said Deputy Prime Minister Alexander Zhukov.
On May 25, Finance Minister Alexei Kudrin said Russia would completely liberalize its foreign exchange regulation and lift all restrictions on capital outflow on July 1. Kudrin also said that capital inflow into Russia in 2005 had exceeded capital outflow for the first time, which he said was due to the healthy investment climate in the country.
Zhukov said this progress would allow Russia to cancel the only remaining restriction ahead of schedule.
"The only limitation that remains today is the need to reserve certain sums on special accounts in the Central Bank during special capital transactions," he said.
The deputy prime minister said the restriction was originally meant to remain in force until January 1, 2007, but that stable macroeconomic indicators - Russia's vast gold and currency reserves ($247 billion), a stable ruble, balanced budget, and heavy foreign investment - would allow them to be dropped on July 1.
"The Central Bank has virtually lifted this restriction in practice, and it has only remained on paper," he said. "The draft law we considered today will abolish this last limitation."
Zhukov said the move would inspire an extra influx of foreign investment into the Russian economy, and bar any possibility of new restrictions in the future.
But he added the law will not make the ruble freely convertible. "It is impossible to make a currency freely convertible simply by proclaiming it such."
Zhukov said the goal required definite economic conditions and a rise in foreign confidence in the ruble, and that the government was making steps in that direction, as trade in oil and gold for rubles had started on Russian markets.
He also said it was necessary to boost the economy and decrease the country's foreign debt.
