National Bank estimates round tripping at 21% of FDI in 2018

The National Bank of Ukraine (NBU) estimated
round-tripping foreign direct investment (FDI) at USD 0.5 bln, or 20.6% of FDI
to Ukraine in 2018 (an increase from USD 0.3 bln, or 10.4% of FDI in 2017), the
central bank reported in an Apr. 3 press release. “Round tripping” is a term to
identify the investment flow, which is reported as FDI, but in fact involves
just the return of domestic capital previously withdrawn from the country. To
reach this estimate, the regulator distinguished the flows in which the ultimate
controlling investor was a resident of Ukraine.

In 2010-2018, round-tripping FDI amounted to USD 8.4
bln, or 22% of the total FDI inflow to the country. In 2010-2013, the volumes
of round tripping were the highest, reaching around one-third of net FDI.
Cyprus, the Netherlands, Switzerland, and Austria are the leading sources of
round-tripping operations with Ukraine, the NBU said.

Evgeniya Akhtyrko: The reported volume of round tripping is likely to involve the part of
the estimated USD 1.3 bln that left the country during the economic collapse in
2014-2015. The increase in round tripping points to some growing confidence
related to business operations in Ukraine. Nevertheless, the volume of this
capital is almost negligible given the huge demand for capital inflow needed to
make structural changes in Ukraine’s economy.