The National Bank of Ukraine (NBU) understands the problems faced by businesses due to the current limits on foreign currency transfers, but, as before, considers it better to gradually remove restrictions for everyone than to issue individual permits.
“The National Bank understands the problems faced by business entities due to existing currency restrictions. (…) Granting individual permits to individual companies will require spending the country’s limited resources, which can significantly undermine the National Bank’s ability to create prerequisites for easing currency restrictions for everyone,” the regulator responded to the Interfax-Ukraine agency’s request.
The Central Bank noted that the Memorandum on Economic and Financial Policy within the framework of the 4th revision of the Extended Financing Program (EFF) with the International Monetary Fund (IMF) stipulates that the NBU’s decisions on granting individual permits must be consistent with the Strategy and goals of ensuring macroeconomic, financial and external stability, and will be adopted in cases of exceptional importance for the state in wartime.
“In view of this, the National Bank will make decisions on further steps to ease currency restrictions taking into account their phasing in accordance with the Roadmap, as well as in compliance with the key principles of the Strategy and only when the proper prerequisites for their implementation are formed,” the NBU emphasized .
The regulator added that the current situation in Ukraine’s economy and financial markets requires considerable prudence when making decisions that may affect macroeconomic stability.
“The NBU is consistent in carrying out its policy aimed at balanced decision-making, which would be based on a comprehensive analysis of the impact of relevant operations on the state of the money market, including the level of Ukraine’s international reserves,” the answer reads.
“On the one hand, this is necessary to maintain the balance in meeting the priority needs of the country’s economy, and on the other hand, to prevent the balance on the money market from being disturbed,” the National Bank summarized.
The regulator recalled that it allows businesses to repay overdue interest payments as of May 1, 2024 within a quarterly limit of EUR1 million, while all future scheduled payments can be repaid without any amount limit.
In addition, in part – up to EUR1 million per issuer – it is allowed to repatriate “new” dividends on corporate rights or shares abroad, accrued based on the results of operations in the period starting from January 1, 2024.
In addition to these measures, from July 11, 2024, it is allowed to transfer funds from Ukraine for the payment of dividends by a resident legal entity in excess of the previously permitted amounts, provided that these funds are ultimately directed to the implementation of scheduled payments of interest income (coupons) on Eurobonds issued by registered non-resident.
As reported, the Cabinet of Ministers by its 15th decrees dated February 6 and 13 approved a petition to the National Bank of Ukraine with a request to allow companies from the VF Ukraine, DTEK, Metinvest, Interpipe and Kernel groups to make payments from Ukraine for Eurobonds and other obligations. obligations to external creditors.
The attached documents stated, in particular, that such decisions would help maintain investor confidence, preserve foreign exchange funds for companies, many of which are the largest exporters, and ensure their more efficient and stable work in the future. According to the calculations of the Interfax-Ukraine agency, the total amount of requests is more than $1.8 billion.
At the request of the Interfax-Ukraine agency, the NBU informed that it has taken into account these petitions and will consider each one individually.
At the same time, the head of the mission of the International Monetary Fund (IMF) in Ukraine, Gavin Gray, sent a letter to the Ukrainian authorities, in which he expressed doubt that such an individual approach corresponds to the Strategy for Easing Currency Restrictions, approved by the National Bank last summer to fulfill obligations under the EFF Extended Financing Program . The Fund is also concerned about the fairly significant amount of possible payments and the possible impact of such decisions on Ukraine’s future negotiations regarding the restructuring of sovereign Eurobonds with commercial creditors.
Ukraine’s net international reserves (NIR) in July this year decreased by $3 billion to $23.30 billion, according to information from the National Bank.
At the same time, according to the quantitative performance criterion (QPC) in the updated EFF expanded financing program, Ukraine’s ChMR should amount to at least $28.8 billion at the end of September this year, and at least $26.3 billion at the end of the year.
In general, international reserves of Ukraine in July, according to preliminary estimates of the NBU, decreased by 1.8%, or by $572.3 million – to $37 billion 231.9 million.
