Given favorable FX market conditions, the successful completion of the third review under the IMF’s EFF and moderate inflation risks, the NBU Board has moved ahead with liberalization of FX controls.
As before, the NBU’s main focus is on removing obstacles to foreign economic transactions and inflows of foreign direct investment, exsplained NBU Governor Ms Gontareva, speaking at a press briefing following theNBU’s Board meeting on monetary policy.
First, the NBU allowed has allowed businesses to repatriate dividends accrued not only in 2014-2015, as was the case until now, but also dividends accrued in 2016. The regulator has also simplified the rules for repatriating dividends, allowing each business to repatriate up to USD 5 million per month.
Since the NBU permitted businesses to repatriate dividends accrued in 2014-2015, the latter have paid USD 1 billion in dividends abroad. It is worthy of note that businesses’ purchases of foreign currency were equally distributed in time and had little bearing on the exchange rate.
Second, the NBU has allowed banks to repay their loans to non-resident banks with a rating no lower than “А3”/“А-” assigned by the world's leading rating agencies such as Fitch Ratings та/або Standard&Poor’s, та/або Moody’s before these loans fall due. Also, banks will be allowed to repay debts under loans granted by foreign creditors using proceeds raised from the placement of debt securities abroad.
Third, the NBU has increased the maximum amount of advance payments under import agreements entities are allowed to make without using letters of credit from USD 1 to USD 5 billion ( validation by the first-class bank is required). As is evidenced by the rise in this amount from USD 0.5 million to USD 1 million that took place in September last year, this will not influence the amount of such payments in any significant way.
These steps are expected to improve the country’s investment climate, and make it easier to operate for exporters that import goods with the purpose of exporting them later. At the same time, none of these steps will destabilize the FX market, said Ms Gontareva.
The amendments to this effect are approved by NBU Board Resolution No. 33 of 13 April 2017 On Amendments to Some NBU Regulations. These amendments shall take effect on 14 April 2017.