The National Bank of Ukraine (NBU) is working together with the Ministry of Economy of Ukraine to improve the business environment, resume the operation of businesses, and stimulate the economic recovery.
The NBU has brought its regulations in line with amendments introduced by Resolution of the Cabinet of Ministers of Ukraine No. 761 dated 7 July 2022, which cancels the notion of critical imports. This measure will allow businesses to purchase foreign currency and deliver payments for imports classified as commodity groups 01–97 in Ukrainian Classification of Goods for Foreign Economic Activity (UCGFEA) in line with the Law of Ukraine On Customs Tariff of Ukraine. In other words, imports of any goods are allowed now.
At the same time, it should be noted that restrictions on the purchase of foreign currency and cross-border transfers for imports of services will remain in effect. Businesses will be able to import only those services, works, intellectual property rights, and other intangible rights from the list that was also approved by Resolution of the Cabinet of Ministers of Ukraine No. 761 dated 7 July 2022.
An important prerequisite for simplifying the FX restrictions on imports of goods has become the Law of Ukraine On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine to Revise Certain Tax Benefits, which took effect on 1 July 2022 and reintroduced the import duties and taxes.
As of the beginning of July, the list of critical imports included about 90% of goods that had been imported before the war. In this regard, the NBU estimates that the easing of the restriction noted above will not create substantial pressure in the FX market. Instead, it will improve the business environment in Ukraine since businesses will be able to purchase all goods required for the production process.
The prospect of a slowdown in the imports growth due to the reimposition of import duties and taxes and further production recovery in Ukraine will narrow the gap between demand and supply in the FX market.
In addition, taking into account the requests from businesses and the Ministry of Economy of Ukraine, the NBU extends settlement deadlines for export and import transactions from 120 to 180 days. The respective decision seeks to support Ukrainian companies by strengthening their capacity at a time when they have logistical problems with exporting and importing goods caused by the war.
New requirements will apply to the residents’ export and import transactions made after 5 April 2022. As before, settlements under transactions that were made before 5 April must be made within 365 days.
In order to ease pressures on the foreign exchange market, the NBU has reduced from 10 to 2 business days the deadlines for the use of foreign currency purchased by residents after 11 July 2022. The relevant restriction shall not apply, in particular, to the purchase of foreign currency:
- by residents carrying out mobilization and other measures specified in the laws of Ukraine that regulate the areas of ensuring national security and defense
- by government bodies authorized in line with Ukrainian laws to conduct investigative, counterintelligence, intelligence activities, or pre-trial investigations
- by the State Treasury Service of Ukraine
- on the basis of special decisions by the NBU that are issued on request of the CMU, other public agencies of Ukraine, the National Security and Defense Council of Ukraine, and the Security Service of Ukraine
In addition, the NBU has simplified some FX restrictions for diplomatic missions, foreign consular offices in Ukraine, and government bodies authorized in line with Ukrainian laws to conduct investigative, counterintelligence, intelligence activities, or pre-trial investigations.
The relevant amendments were approved by NBU Board Resolution No. 142 On Amendments to NBU Board Resolution No. 18 dated 24 February 2022 dated 7 July 2022, which is effective 9 July 2022.
In line with NBU Board Resolution No. 21 dated 24 February 2022, the purchase of foreign currency and cross-border transfer of currency valuables shall be made to buy goods from the list of critical imports. The respective list of goods and services was approved by Resolution of the Cabinet of Ministers of Ukraine No. 153 dated 24 February 2022.
Following the introduction of import restrictions at the beginning of russia’s full-scale war against Ukraine, the Cabinet of Ministers of Ukraine has expanded the list of critical imports 18 times, taking into account the requests from businesses.
On 4 April 2022, the NBU reduced the settlement deadlines for export and import transactions that were executed after 5 April 2022 from 365 to 90 calendar days to prevent capital outflows from Ukraine. At the same time, considering logistical problems with exporting and importing goods, which were caused by the war, and requests from businesses, the relevant deadlines have been extended to 120 calendar days on 8 June 2022.