NBU Permits Repayment of Newly Borrowed Foreign Loans
On 21 June 2023, the National Bank of Ukraine (the "NBU") yet again eased the foreign exchange restrictions by allowing Ukrainian entities to repay principal, interest and other amounts payable under foreign loans subject to the following conditions:
a loan or at least a portion thereof has been credited to the borrower's account after 20 June 2023;
a rate of interest (including fees, charges and other payables) shall not exceed 12% per annum.
Provided, however, that:
for a loan with a tenor of up to 3 years, a borrower may repay principal, interest and other amounts payable thereunder solely with the use of his at the expense of either own or borrowed foreign currency proceeds (not purchased in the interbank market);
for a loan with a tenor of more than 3 years, a borrower may purchase foreign currency to pay interest, default interest, fees and charges throughout the life of a loan except for principal, which is allowed to be repaid with the use of purchased foreign currency solely after the expiry of a 3-year term. For the avoidance of doubt, the repayment of principal any time prior to the expiry of a 3-year loan term is permitted at the expense of borrower’s own or foreign currency proceeds (not purchased in the interbank market).
Importantly, any payments under foreign currency loans borrowed prior to 20 June 2023 as well as any loan prepayments remain explicitly prohibited.
It is expected that the change will help Ukrainian private corporates to attract fresh money from foreign lenders to finance long-term projects related to the reconstruction and recovery of Ukraine.
The changes to NBU Board Resolution No. 18 dated 24 February 2022, were introduced by NBU Board Resolution No. 77 dated 20 June 2023, and come into effect today, on 21 June 2023.