National Bank of Ukraine Has Allowed Repayment of Certain Categories of Foreign Loans
On 15 June 2023, the National Bank of Ukraine (the "NBU") announced on its official website a long-awaited easing of currency control restrictions, with changes to the relevant regulatory acts, provided for in NBU Board Resolution No. 73 dated 15 June 2023, taking effect from 16 June 2023.
Among other things, Ukrainian resident borrowers will be able to repay principal, interest and other amounts due under foreign loans which are:
guaranteed by an international financial institution; or
extended with the participation (by way of lending or providing insurance, guarantee or surety) of a foreign export credit agency or a foreign state through its authorized institution, or a foreign legal entity among whose shareholders are foreign state or foreign state bank.
The NBU also states that residents will have the opportunity to make such payments on the terms and conditions provided for in the underlying loan agreements. However, prepayment of principal and interest or changing the maturity of loan to earlier dates are prohibited.
We agree with the NBU's assessment that the FX liberalisation will contribute to the restoration of foreign financing and investments in Ukraine, and will restore the familiar market instruments for use by international creditors and donors that meet the needs of the Ukrainian economy.