Ukraine central bank further eases ForEx rules

On May 25, the National Bank of Ukraine (NBU) made noticeable steps towards further foreign currency liberalization. In particular, the regulator increased the time on export/import payments to 180 days from 120 days previously. Also, the NBU allowed the return of hard currency abroad for foreign investors if the funds are received from the sale of corporate rights or securities. On the top of that, businesses will be allowed to repay foreign loans earlier if the loan is under IFI guarantees. “The steps will facilitate investment climate improvement and will strengthen the business environment for exporters and importers”, said Yakov Smolii, acting Head of the NBU. “At the same time, none of the measures threaten ForEx destabilization”. In the meantime, the NBU tightens requirements on revealing information about finial beneficiaries of non-resident creditors to prevent fraud with capital operations.

Alexander Paraschiy: This is encouraging news for businesses. Many exporters face difficulties when complying with daily limits on foreign cash return. In many cases, the restriction simply prevents Ukrainians from bidding for export contracts since technological processes go far beyond the outline number of days. There is still huge room for liberalization and we expect further easing as long as no turmoil on the ForEx market occurs.  However, in light of disturbing tendencies on  external markets, there is a risk that the next liberalization steps might be delayed. A lot in this story depends on cooperation with the IMF, since the IMF money has a soothing effect on all players.