The National Bank of Ukraine moves ahead with measures to gradually phase-out administrative restrictions on operations in the money and FX markets. On 24 March 2016, NBU Board Resolution No. 192 On Amendments to NBU Board Resolution No. 140, dated 3 March 2016, was issued to this effect.
The easing of certain restrictions put in place as part of temporary anti-crisis measures will facilatate additional capitalization of banks, the restructuring of external debt obligations and ensuring the transparent application of the provision regarding a ban on early repayment of FX loans by residents.
In particular, this resolution intends to ease the rules governing operations under loan/credit agreements with non-residents. A ban on early repayment of loans/credits shall not apply to FX transfers under amended loan/credit agreement with regard to the frequency of interest payments or deferring (bringing forward) interest payments for not more than 180 days 180 days. The list of exclusions from the ban on early repayment of loans/credits has been expanded to include loans issued with participation of foreign export-and-import agency.
An authorized bank is allowed to credit amounts due to the non-resident under certain FX operation to the investment accounts held by non-resident investors. The permit will be in effect as long as the following conditions are met: an authorized bank holds an individual license for the transfer of foreign currency abroad to execute certain FX transactions; amounts are credited to the investment account held by the non-resident recipient within the limits as to the amounts and terms as permitted by an individual license; and funds disbursed from the investment shall only be used to increase the bank’s capital.
The amendments to the resolution are intended to:
- Make it easier for residents to restructure external debt obligations (loans/credits issued by non-residents under loan agreements executed with participation of foreign export-and-import agencies);
- Facilitate the implementation of capitalization program by authorized banks with outstanding debt arising from certain FX transaction (in view of the imposition of temporary restrictions on funds transfers abroad based on individual licenses).
This Resolution shall take effect from 26 March 2016 and remain in effect until 8 June 2016 inclusive. However, regardless of the validity period of the aforementioned resolutions, the National Bank is set to move ahead with plans to liberalize FX controls in a gradual manner if foreign exchange market conditions and the economic situation are favorable.