The NBU continues to ease exchange controls

On 9 July 2024, the National Bank of Ukraine (NBU) amended the Resolution of the NBU’s Board No. 18 "On the Operation of the Banking System During the Period of Martial Law" (Resolution No.18) and the Resolution of the NBU’s Board No. 67 "On establishing exceptions and/or special conditions for implementing deadlines for settlements of export and import transactions and amending certain regulatory acts" (Resolution No. 67).

With effect from 11 July 2024, the following transactions have been expressly permitted

Documentary Credits

• payments under letters of credit, guarantees and counter-guarantees issued / confirmed by Ukrainian banks starting from 24 February 2022 to the benefit of foreign lenders as security for the performance of payment obligations by local borrowers under qualified foreign loans [1] or suretyship agreements;

Sovereign Debt

• payment of fees to foreign banks in connection with arranging sovereign or sub-sovereign loans within the framework of inter-governmental agreements;

Prepayment of Loans

• prepayment of foreign loans by local banks acting as borrowers, guarantors or sureties provided that funds repaid will be injected by foreign lender / creditor into the share capital of such bank;

Guarantees / Suretyships

• transfer of funds by local entities to foreign lenders / creditors under guarantees or suretyships issued as security for the payment obligations of local borrowers under qualified foreign loans;

Recourse Claims

• compensation of amounts paid by foreign guarantors or insurers under the guarantees or insurances issued to the benefit of foreign or local lenders as security for the payment obligations of local borrowers under qualified foreign loans;

War Risk (Re)Insurance

• payment of premium under war risk (re)insurance agreements to foreign (re)insurers owned partially or fully, directly or indirectly, by a foreign state;

Debt Service Reserve Accounts

• depositing foreign currency into offshore debt service reserve accounts (DSRA) with the purpose of making debt payments under suretyships or loan agreements concluded with international finance institutions provided that the obligation to deposit funds into the DSRA is expressly set out in the loan or suretyship agreement;

Eurobonds

• payment of dividends to foreign shareholder / participant (the shareholder) with the purpose of making further payments on international debt securities admitted to trading on foreign stock exchanges (Eurobonds) provided that the following conditions are met simultaneously:

- the payment initiator is an entity distributing and paying dividends (the dividend payer);

- the dividend payer acts as a guarantor / surety for the Eurobond issuer’s (the issuer) payment obligations under the Eurobonds;

- the Eurobonds are floating on the foreign stock exchange as of 10 July 2024;

- the shareholder and the issuer have common significant owners with the dividend payer, or the dividend payer has a significant ownership interest in the shareholder or the issuer. The shareholder and the issuer may be the same entity;

- the amount of dividends paid to the shareholder shall not exceed the amount of upcoming interest (coupon) payments on the Eurobonds due on any dates following 10 July 2024;

- the purchase and/or transfer of foreign currency to pay dividends to the shareholder is allowed not earlier than 10 days prior to the relevant interest (coupon) payment date under the Eurobonds;

- in the event that multiple entities act as guarantors / sureties for the issuer’s payment obligations under the Eurobonds, payment of dividends shall be carried out through one commercial bank; and

- the dividend payer’s commercial bank has received evidence that the abovementioned conditions are satisfied as well as other supporting documents and information as the commercial bank may request from time to time.

Other Permitted Payments

• payment of fees (duties) for actions related to the protection of intellectual property rights;
• endowment payments from local accounts of foreign entities to the local accounts of charitable organization in Ukraine; and
• transferring funds by foreign entities to residents in Ukraine under lease, rental or leasing agreements.

In addition, with respect to export and import contracts, the NBU has ruled that no settlement deadline shall apply to import of military and dual-use goods and equipment provided that import of such goods and equipment relates to the performance of state defence procurement contracts or is made with the purpose of setting up and/or expanding production capacities to manufacture defence-related goods. Furthermore, the following new obligatory settlement terms for the export and import of certain agricultural commodities [2] will apply:

• 90 calendar days for transactions made from 11 November 2023 to 11 July 2024, inclusive; and
• 120 calendar days for transactions made from 12 July 2024, onward.

[1] Qualified foreign loan means a loan extended by IFIs, ECAs or foreign state-owned financial institutions

[2] Wheat, rye, barley, oats, corn, soybeans, rapeseed or colza seeds, sunflower seeds, soybean oil, sunflower oil, rapeseed oil, and oilcake

Source: bank.gov.ua