The National Bank is introducing the largest package of easing foreign exchange restrictions for enterprises since the beginning of a full-scale war. This is stated in the regulator's message.
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What the NBU has softened
Abolished all currency restrictions for the import of works and services
The NBU provides the opportunity for businesses to buy and transfer foreign currency abroad to carry out operations for the import of works and services. In connection with these changes, Resolution of the Cabinet of Ministers dated February 24, 2022 No. 153 “On certain issues of ensuring imports” loses its relevance. In connection with this, the NBU will turn to the Government with a proposal to cancel it.
In addition, the NBU has provided the opportunity for businesses to buy foreign currency and transfer funds abroad to pay airport and port taxes, fines, and membership fees. This is due to the fact that the above-mentioned resolution of the Government of Ukraine also partially contains the corresponding operations.
Read: The NBU estimated the completion of the first stage of currency liberalization at $5.5 billion
Such changes will support Ukrainian manufacturers and provide the opportunity for domestic businesses to enter new markets, including those from which manufacturers of the aggressor country are being forced out due to sanctions.What does this give: This is accordingly will contribute to a gradual increase in export earnings to Ukraine.
- Provided the opportunity for businesses to repatriate “new” dividends
Enterprises will be able to repatriate dividends on corporate rights or shares abroad accrued based on operating results for the period beginning on January 1, 2024. This mitigation does not apply to the payment of dividends from retained earnings for previous periods or reserve capital.
To minimize risks to macro-financial stability, the National Bank has set a monthly limit for the repatriation of “new” dividends at the equivalent of 1 million euros. Monitoring of compliance with this norm will be ensured thanks to the NBU automated information system “E-limits”.
What does this give:Providing the opportunity to repatriate new dividends will facilitate the influx of new investments into Ukraine, minimize the risks of curtailing the activities of enterprises with foreign capital and support the economy.
- Allowed the transfer of funds abroad for leasing/renting
Legal entities and individual entrepreneurs will have the opportunity to transfer funds abroad for settlements under leasing/rental agreements without additional restrictions on the subject of leasing/rental, as well as to conclude an agreement. Previously, such permission only applied to the leasing/rental of vehicles.
What this gives: The corresponding changes will allow the business to also pay off previously concluded leasing and rental agreements, which will actually make it possible to conclude new contracts and attracting necessary equipment to Ukraine to conduct business activities.
- Eased restrictions regarding the repayment of “new” external loans
The NBU is simplifying the conditions for the purchase of foreign currency by residents for the purpose of servicing and repaying new external loans, funds for which are received in foreign currency from abroad after June 20, 2023 to the accounts of borrowers in Ukrainian banks.
Read: The regulator is preparing a number of steps for currency liberalization in the coming weeks
In particular, the minimum period for using a “new” loan is reduced from three to one year, after which it is allowed to purchase foreign currency to repay such a loan. Accordingly, the ban on buying foreign currency to repay “new” loans will apply exclusively to repay short-term loans for a period of up to one year.
In addition, the NBU will allow businesses to buy foreign currency to pay interest on “new” loans, regardless of period of use of the loan.
What does this give:All this will lead to an increase in the ability of Ukrainian businesses to attract new external loans not only from official partners, but also from private investors.
Allowed 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, in accordance with the terms of the loan agreement, are due for payment in the period from February 24, 2022.
Within the framework of one agreement, for overdue (as of May 1, 2024) interest payments, it is possible to transfer no more than 1 million euros in equivalent per calendar quarter. At the same time, this restriction will not apply to future scheduled interest payments.
To protect macro-financial stability, additional conditions are provided for the following operations:
absence of overdue debt on the relevant loan agreement as of February 24, 2022;
it is prohibited to purchase and transfer funds using credits or advances received from residents;
there is no provision for early execution of payments or restructuring of overdue payments.
What this gives: These changes will minimize the likelihood of defaults by Ukrainian borrowers and will provide more favorable conditions for the restructuring of external loans, and will also improve conditions for attracting new capital to Ukraine.
Eased restrictions regarding the transfer of foreign currency from representative offices in favor of their parent companies
The NBU will allow representative offices of international card payment systems and foreign airlines to purchase and transfer foreign currency abroad to the account of a non-resident legal entity whose interests these representative offices represent in Ukraine. The monthly limit for carrying out such transactions (by one representative office of one company) is set at the level of 5 million euros in equivalent.
What does this give: Such changes, in particular, will contribute to the further development of non-cash settlements in Ukraine.
When the easing comes into force
The vast majority of They will come into force on May 4, 2024, only the opportunity to repatriate “new” dividends will start working on May 13, 2024.
Recall
At a monetary briefing on April 25, NBU head Andrei Pyshny announced in the near future time steps towards currency liberalization within the framework of the strategy for easing currency restrictions agreed with the International Monetary Fund.
- NBU Currency
