From today, the NBU changes currency restrictions: what awaits business
Kyiv • UNN
Starting November 20, 2024, the National Bank will introduce changes to currency restrictions to support international trade. The amendments relate to import contracts, repatriation of dividends, and the use of foreign currency loans.
Starting November 20, the National Bank will update the rules for foreign exchange transactions to support international trade and technical assistance. The changes will affect import contracts, repatriation of dividends and the use of foreign currency loans. UNN reports this with reference to the NBU press service.
Starting November 20, 2024, the National Bank of Ukraine will be amending the current currency restrictions. On the one hand, the NBU is easing a number of restrictions to support international cooperation in foreign trade, as well as international technical assistance projects and programs. On the other hand, it is taking measures to strengthen the discipline of compliance with currency restrictions
Reportedly, the changes will affect several areas:
- Transfer of funds to fulfill obligations under import contracts
According to the National Bank, Ukrainian businesses can currently pay for the import of any product only if the goods are delivered after February 23, 2021. However, starting from November 20 , Ukrainian companies will be able to pay for the import of goods without limiting the term of their delivery to Ukraine, provided that the funds are transferred in favor of:
- a foreign export credit agency (ECA) / a foreign state through its authorized person / a foreign person whose members include a foreign state or a foreign bank (provided that the foreign state is a member of this bank);
- other non-residents, provided that they participate in import operations (through lending, insurance, guarantee, surety) of a foreign ECA/foreign state through an authorized person/foreign entity whose members include a foreign state or a foreign bank (provided that a foreign state is a member of this bank).
The monthly limit for such transfers is set at 10% of the amount of overdue debt under the contract for the import of goods (as of November 1, 2024).
[The NBU believes that such changes will encourage foreign countries, state-owned banks, and ECAs to maintain and strengthen existing commercial ties between foreign exporters and the Ukrainian market. This will also minimize the risks of a decrease in potential financing and a decrease in Ukraine's investment attractiveness.
- Settlements under international technical assistance projects
Currently, the NBU has indicated that it is possible to transfer foreign currency from Ukraine for payments under EU-funded international technical assistance/border cooperation projects/programs. At the same time, Ukrainian residents receive technical assistance not only from EU countries but also from other countries for projects funded by foreign donors.
In view of this, starting from November 20, 2024, the NBU will allow foreign currency to be transferred abroad to make payments under international technical assistance projects, regardless of which state or organization funds such a project
Such changes, according to the NBU, will comprehensively address the problem of settlements under international technical assistance projects, which will have a positive impact on both the position of Ukraine and individual resident beneficiaries of such assistance, and will also facilitate positive decisions by international donors to further support Ukraine.
- Repatriation of dividends abroad
The NBU is reportedly closely monitoring compliance with the currency restrictions. Based on the results of inspections that showed attempts to circumvent the monthly limit on the repatriation of dividends, the NBU has established additional criteria for such transactions.
Thus, starting from November 20, 2024, Ukrainian companies will be able to take advantage of the possibility of partial repatriation of dividends on corporate rights or shares only if the following conditions are met:
- the period of the issuer's activity from the date of state registration to the date of the relevant transaction is at least 12 months;
- at least six months have passed since the foreign investor/non-resident acquired ownership of the corporate rights/shares of the issuer paying dividends before the date of the relevant transaction.
- Use of foreign currency loans to purchase foreign currency denominated securities
To minimize the risks of circumventing the current currency restrictions, the NBU will also ban the use of foreign currency loans to purchase foreign currency-denominated securities starting from November 20, 2024.
