Ukraine further loosens its FX controls
The National Bank of Ukraine (the “NBU”) has made further steps to liberalize existing currency control rules and lift some of the restrictions in place:
1. Recourse payments under cross-border guarantees. Apart from lifting a USD 50,000 monthly cap set for payments under individual licenses by Ukrainian banks, the NBU has clarified some other individual licensing regulations. As a result, starting from 15 December 2017, Ukrainian borrowers will no longer require an individual license of the NBU to make payments abroad to reimburse any foreign guarantor upon discharging the borrower’s obligations under a loan agreement with a Ukrainian bank by such guarantor.
This step is very logical as a foreign entity making payments to Ukraine should be able to receive money back without any restrictions. At the same time, such novelty should expand the toolkit available to the parties in debt restructurings and give a boost to workouts, as well as facilitate local lending with foreign guarantee support.
2. Early repayment under FX cross-border loans. With effect from 14 December 2017, the NBU allowed Ukrainian borrowers to make early repayments under FX cross-border loans extended, guaranteed or insured in full or in part by any foreign state through its respective agencies. This development tops up the list of numerous earlier exceptions from the early repayment prohibition, which effectively makes cross-border trade and export finance easier again.
3. Repatriation of dividends. Effective from 15 November 2017 the NBU allowed repatriation of dividends for 2013 and backwards subject to a monthly limit of USD 2 million. This is in addition to repatriation of dividends previously allowed by the NBU for the period from 2014 to 2016 subject to a monthly cap of USD 5 million.
For more information or in case of any detailed questions, please contact Nazar Chernyavsky or Igor Lozenko.