In February-March 2018 the National Bank of Ukraine (the “NBU”) made a number of further steps towards the relaxation of existing currency control restrictions.
Repatriation of dividends
Following earlier NBU decisions enabling gradual repatriation of dividends for 2016 and the preceding years, effective from 3 March 2018, the NBU also allows foreign investors to repatriate dividends accrued in 2017. In addition, the monthly cap for repatriation of dividends was increased to USD 7 million regardless of the period in which the dividends were accrued (previously, lower monthly limits of USD 5 million or USD 2 million applied).
Early repayment of cross-border loans
The NBU allowed early repayment of foreign currency loans of Ukrainian borrowers subject to a monthly cap of USD 2 million. This is on top of numerous previous exceptions from the early repayment prohibition and applies to early payments under cross-border loans which are not otherwise covered by such exceptions. As a result of this development, early payments can now be made out of Ukraine in relation to any type of cross-border foreign currency loans.
With effect from 16 February 2018, the NBU allows Ukrainian banks to attract so-called “synthetic” loans (cross-border loans denominated in Ukrainian hryvnia with all payments effected in foreign currency) from any foreign lender and with no need to register such loans with the NBU. Previously, Ukrainian banks could only borrow such loans from international financial institutions (e.g. EBRD and IFC).
This enhancement of UAH financing rules paves the way for Ukrainian banks to attract UAH-linked financing on international capital markets and is expected to facilitate UAH lending in Ukraine.