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."
