Business calls for further easing of currency restrictions

Yesterday, representatives of EBA companies met with NBU Governor Andriy Pyshnyi and his deputy Yuriy Heletiy. They discussed the recently adopted easing of currency restrictions and further steps towards currency liberalization, the resumption of lending, etc.

Thus, the NBU Governor thanked the European Business Association for its support of the NBU's recent steps towards currency liberalization. In particular, these include the abolition of currency restrictions on imports of works and services, repatriation of "new" dividends, and the possibility for legal entities and individual entrepreneurs to transfer funds abroad under leasing/rental agreements without additional restrictions on the subject of the lease/rental agreement and the date of the agreement (previously, such permission was only available for leasing/renting vehicles). In addition, the NBU has eased restrictions on the repayment of "new" external loans, the ability to repay interest on "old" external loans, and the transfer of foreign currency to parent companies.

Mr. Pyshnyi emphasized that the risks of such steps have been carefully analyzed, assessed, and taken into account in the macroeconomic forecast, as well as the benefits that businesses and the economy as a whole receive in the form of opportunities to enter new markets and attract investment.

At the same time, business representatives emphasized the need to take the following liberalization steps: to gradually expand the established dividend limits and to review the conditions for dividend payments for LLCs and large companies (since currently, large companies that approve their financial statements once a year will actually be able to pay dividends only in 2025). It is also important to increase the limits on corporate cards in hryvnia for transactions outside Ukraine and to allow currency to be transferred to accounts opened with banks abroad. At the same time, there are also a number of restrictions on the payment of "old" external debts that will not allow businesses to use the instrument of servicing payments on Eurobonds.

The regulator's next steps in the context of currency liberalization are based on the prerequisites set out in the Strategy for easing currency restrictions, transition to greater exchange rate flexibility, and return to inflation targeting. Mr. Grygoriy also noted that the NBU's capabilities will directly depend on the level of business responsibility. He said that there are initiatives by some companies to extend the timeframe for returning foreign currency earnings. At the same time, it is impossible to move in different directions at the same time: to ease capital restrictions and to extend the terms of return of export earnings. The former will create additional demand for foreign currency, while the latter will reduce supply. It is very dangerous to do different things at the same time. Andriy Pyshnyi called on businesses to act responsibly, which will speed up steps towards currency liberalization for everyone.

In the context of lending, it was emphasized that the loan portfolio has been growing for 11 months in a row, and interest rates have been gradually decreasing, with the NBU discount rate currently set at 13.5% and reduced by 11.5 percentage points over the past 10 months. The regulator recognizes the importance of lending for both business operations and development, as well as for the country's economy. Therefore, the NBU is currently developing a Lending Resumption Strategy, which is expected to be presented at the end of May.

In addition, the NBU is working on a draft law on war risk insurance, which is likely to be presented for discussion in June this year.

At the end of the meeting, the Governor noted that it is important that the right signal on currency liberalization is heard and understood on the global stage. After all, the country desperately needs new capital. Therefore, the regulator is ready to communicate and provide explanations to all businesses, parent companies, etc. that need it/who need such information to continue cooperation and capital inflows to Ukraine.

On behalf of the European Business Association, we would like to thank the NBU for the meeting. We look forward to further dialog and the next steps in the context of currency liberalization.