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National Bank of Ukraine Updates Several Foreign Currency Restrictions

National Bank of Ukraine Updates Several Foreign Currency Restrictions

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On 11 July 2024, new foreign currency (“FX”) easings came into effect to increase Ukraine's investment attractiveness and raise private foreign capital. Specifically, the latest package of amendments, introduced by Resolution No. 83 of the National Bank of Ukraine (the “NBU”) dated 09 July 2024 (“Resolution No. 83”), includes the following FX liberalization measures.

  1. Permission to fulfil obligations under sureties and guarantees, conduct payments under letters of credit, guarantees, and counter-guarantees

To ensure that resident borrowers fulfil credit obligations to non-resident entities, the NBU has allowed them to make payments under documentary and standby letters of credit/guarantees/counter-guarantees opened since 24 February 2022. It has also granted other residents the right to make cross-border transfers under provided guarantees and/or sureties. It is important to note that such transactions can only be carried out if they secure a loan for which payments are permitted under current FX regulations.

  1. Permission to make payments under war risk coverage agreements

From now on, it is allowed to make transfers abroad under agreements that provide for the coverage (insurance) of war risks – loss and/or damage to assets and/or loss (full or partial) of income from such assets in Ukraine as a result of war, hostilities, military operations, terrorist acts, sabotage caused by the aggression of the Russian Federation against Ukraine. However, such transfers are allowed only for non-resident legal entities whose shareholders include a foreign state (except for the Russian Federation and the Republic of Belarus).

  1. Permission to accumulate FX funds for repayment of loans from IFI

Resolution No. 83 granted resident borrowers the right to purchase FX funds to accumulate them for future payments under loan agreements concluded with international financial institutions ("IFIs"). The amount of funds that can be held in an FX account is determined according to the terms of loan agreement. However, funds purchased for such purposes can be used exclusively to repay obligations to IFIs.

  1. Clarifying the terms of the Eurobond repayment

The NBU has introduced changes aimed at improving the repayment possibilities of certain external debts. In particular, Resolution No. 83 allowed dividend payments in favor of a related non-resident legal entity that is the issuer of foreign debt securities admitted to trading on a foreign exchange ("Eurobonds"). It is established that a resident has the right to pay dividends in an amount not exceeding the next interest income payment (coupon payments) in accordance with the terms of the Eurobonds.

It is important to clarify that when carrying out the described transactions, general restrictions on dividend payments for corporate rights do not apply (such as limits on the maximum amount of transfers permitted within a single month) that were previously allowed by the NBU earlier this year (more details on the procedure of dividend payment can be found in this Legal Alert).

  1. Permission for transfers to satisfy claims of guarantors, sureties, and insurers

From now on, it is allowed to make transfers to satisfy the claims of foreign export credit agencies, foreign states or IFIs that participate in the provision of an external loan to a resident of Ukraine through surety, guarantee or insurance. This amendment allows, in particular, to reimburse the costs incurred by such non-resident entities arising from their participation in the provision of loans to Ukrainian borrowers.

  1. Other FX easing measures

In addition to measures aimed at improving investment attractiveness, Resolution No. 83 contains a number of other important easings, including:

  • the list of defence goods that can be purchased abroad by individual volunteers has been expanded
  • permission for foreign companies to make charitable contributions from UAH bank accounts
  • Permission for individuals to return social payments received in a foreign country
  • clarification of the provisions regarding the existing limit of 100,000 UAH per day for acquiring FX cash

By Roman Stepanenko, Partner, and Kateryna Oliynyk, Counsel, Asters

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Asters has consistently remained at the top of the Ukrainian legal market throughout its history being acknowledged as Ukraine Law Firm of the Year by Who's Who Legal (2018-2022), The Lawyer European Awards (2020-2021), Chambers Europe Awards 2020 and holds top positions in the most authoritative international market reviews: The Legal 500, Chambers Global and Chambers Europe, IFLR 1000, Who's Who Legal, Best Lawyers.

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