The Central Bank of Russia keeps increasing the limit of bi-currency band

On February 24 the Central Bank of Russia increased the limit of bi-currency band on 5 kopecks to RUR 35,05 – 42,05 for the 13th time within a month. It happens against the backdrop of continuing rally on currency market when ruble since the start of the year went down in value on 9 % to USD and on 8 % to EUR and cut psychologically important historical peak rates, that didn’t change since the financial crisis of 2008.

In order to smooth the process of national currency rate devaluation at the moment of economy slackening, the Central Bank begins using money support, i.e. it sells the currency and increases the demand for the ruble in doing so. When the investment amount reaches USD 350 million, the limit automatically increases on 5 kopecks. The reverse process is similar.

Since the beginning of 2014 during 2 incomplete months the Central Bank has already increased the high limit of the band 29 times, whereas from August to December 2013 there were “only” 25 corresponding increases.

Obviously, the situation in Russian economy is far from stability and the fact that ruble is rapidly losing weight means that there are important macroeconomic reasons for it. It is indirectly confirmed by decrease of the industrial production on 0,2% in January 2014 in comparison with the similar period of the previous year, along with perpetual outflow of investments. Moreover, the financial power is likely to admit in the near future that the beginning of the year was disappointing for the economy and that in whole the lowering of the GDP is expected.

The pattern of growth, based on export of resources, has fully run its course despite high oil prices. The President of the Russian Federation V.V. Putin appealed the expert community, RAS in particular, to formulate a proposal on mobilization of new sources of economic development. It remains to wait, that the expert community and government agencies will find and put into practice consensus concerning new economic policy.

Penalties below the statutory minimum: to be or not to be?

In January 2014 the Constitutional Court of the RF (CC) has begun the consideration of complaints from small business about the proportionality of penalties for administrative violations. Nine companies at once have lodged a complaint for overwhelming penalties under different articles. As a reminder, small business representatives come out with the claim for infliction of penalties below the statutory minimum not for the first time yet, referring to the disparity in incurred penalties.

The judgment in the case of Maslyanskii grain reception center from Tyumen inspires hopes in small business representatives for successful settlement of this question. In January 2013 the company was fined 300 000 RUB for late reporting on its activity to the Federal Antimonopoly Service. The claimant mentioned that penalties do not take into account the company size. Then the CC agreed with the claimant and held the related norm of the Code of administrative violations (KoAP) as unconstitutional.

Now, inspired by the success of their colleagues, other nine small business representatives refer to the absence of the differentiation of penalties in the legislation. They are of the opinion that the company size should be taken into account as the differentia by the determination of the amount of penalties.

The judge Aleksandr Kotov noted, that the penalty of 300 000 RUB, statistically, makes up about 30% of the average annual financial result of small business enterprises, which means that such penalty could bring them to bankruptcy. At the same time the judge is of the opinion that penalty relief is permissible until it does not lead to legal nihilism. The main purpose of the hardening of penalties is the prevention of law violations, and an excessive remission could cause negligence to the law. He suggests to settle this problem by providing in the current legislation for the indicators of property status and financial standing of legal persons, which would give occasion to the reduction of the size of sanctions, as well as by determining of threshold values of possible reduction.

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