The National Bank carried out the largest liberalization of currency restrictions since the beginning of the invasion

Author:
Sofiia Telishevska
Date:

The National Bank of Ukraine is implementing the largest package of loosening currency restrictions for enterprises since the beginning of the full-scale war. Most of the changes will take effect on May 4, 2024.

The regulatorʼs statement says that the changes should improve the conditions for doing business in Ukraine and facilitate the entry of domestic businesses into new markets.

The NBU implements the following changes:

  • All currency restrictions for the import of works and services are abolished.

The business will be able to buy and transfer foreign currency abroad for operations on the import of works and services. The National Bank will appeal to the government with a proposal to cancel the well-known Resolution of the CMU No. 153 of February 24, 2022, which, given the changes, loses its relevance.

  • The business gets the opportunity to repatriate "new" dividends.

Companies will be able to repatriate dividends on corporate rights or shares abroad accrued from January 1, 2024. This relief does not apply to the payment of dividends from retained earnings of previous periods or reserve capital.

These are the only changes that will take effect on May 13, 2024. The rest of the changes come into effect on May 4.

According to the head of the National Bank of Ukraine, Andriy Pyshnyi, legal entities and individual entrepreneurs will be able to transfer funds abroad under leasing/rent without additional restrictions regarding the subject of leasing/rent, as well as the date of conclusion of the contract. Previously, such permission was only applicable to the leasing/renting of vehicles.

Restrictions on repayment of "new" external loans are also being eased.

"We are simplifying the conditions for the purchase of foreign currency by residents in order to service and repay "new" external loans, the funds for which are received in foreign currency from abroad after June 20, 2023, to the accounts of borrowers in Ukrainian banks. From three to one year, the minimum period of using a "new" loan, upon reaching which it is allowed to buy foreign currency to repay such a loan, is reduced. Accordingly, the ban on buying foreign currency to repay "new" loans will be applied exclusively to repayment of short-term loans with a term of up to one year. Also, businesses will be able to buy foreign currency to pay interest on "new" loans, regardless of the term of the loan," the head of the NBU added.

It is possible to repay interest on "old" external loans.

Resident borrowers will be able to transfer funds abroad to pay interest payments on "old" external loans, which, according to the terms of the credit agreement, are due in the period from February 24, 2022.

"Now the business will be able to make scheduled interest payments. And also to gradually pay off the accumulated arrears on interest payments, formed from February 24, 2022 to May 1, 2024, with the limit of the amount under one contract in the amount of one million euros per quarter," the NBU explained.

Restrictions on the transfer of foreign currency in favor of parent companies are eased.

Representative offices of international card payment systems and foreign airlines will be able to purchase and transfer foreign currency abroad to the account of a non-resident – a legal entity whose interests they represent in Ukraine. There is also a monthly limit of €5 million equivalent.

"The risks of such a step are carefully analyzed, calculated and taken into account in the macroeconomic forecast, as well as the benefits that business and the economy in general receive in the form of opportunities to enter new markets or attract investments," Pyshnyi added.

According to him, this step, together with other measures of the National Bank of Ukraine, should allow Ukrainian business to "breathe to its full potential" and promote the involvement of private capital in the recovery of the economy.