The National Bank of Ukraine has introduced a new valuation methodology for estimating the value of the stock of foreign direct investment (FDI) based on their current market value. This move will make it possible to bring the value of the stock of FDI closer to market values and reduce the discrepancies between data compiled by the NBU data and the State Statistical Service of Ukraine (hereinafter- the SSSU).
The 2008–2009 global financial and economic crisis caused a significant decline in the market value of the enterprises' assets, including banks’ assets. As the revaluation of assets has not been carried out, a portion of the stock of FDI has been overvalued on the books since 2010.
The methodology of the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6, IMF, 2009) requires that the revaluation of assets be carried out in case of major changes in market values of assets. The NBU has applied this methodology since 2015.
Following the revaluation of the stock of FDI valued at the price of the latest transaction based on the market value during the period from 2010 to 2016, their value declined by USD 14.1 billion, standing at USD 48.9 billion (versus USD 63.0 billion according to the previous estimation).
Starting from 2017, the revaluation of the major listed companies will be carried out by the NBU and the SSSU on a quarterly basis. In addition, the NBU intends to transfer data on FDI in the banking sector to the SSSU. This move will require the NBU to upgrade software and accommodate formats in which data will be transferred to the SSSU.
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