Following the russian invasion and the imposition of martial law, the National Bank of Ukraine (NBU) restricted cross-border payments from Ukraine. The NBU has gradually relaxed currency controls to improve Ukraine’s business environment and attract new investments.
New Amendments
Dividend repatriation and Eurobond payments. The NBU now allows (i) the repatriation of dividends accrued from 1 January 2024, not exceeding a monthly limit of EUR 1 million; and (ii) Ukrainian companies to repay Eurobond coupons due after 10 July 2024.
Interest eligible for payment under “old” foreign loans is extended. Under foreign loans extended by non-IFI/DFI lenders before 20 June 2023, borrowers may now pay up to EUR 1 million (or its equivalent) per calendar quarter on interest due from 24 February 2022 to 30 April 2024. Interest due after 30 April 2024 may be paid without monetary restrictions. Payment of principal under such loans is still not allowed.
Servicing of new-money cross-border loans. Ukrainian borrowers must use their own foreign currency reserves to repay foreign loan principle extended by non-IFI/DFI lenders after 20 June 2023 with a duration of up to one year (previously three years).
For loans exceeding one year, borrowers repay principal and interest using foreign currency reserves only in the first year, but the requirement does not apply to subsequent years. The early repayment prohibition and the maximum interest rate of 12% for these loans remain effective.
Other payments related to these loans, including interest and fees, are no longer restricted to repayment using existing foreign currency reserves, meaning borrowers may purchase currency for these payments.
Payments for political risk insurance. Ukrainian residents may now pay foreign state-owned or partially state-owned companies for war risk insurance, covering damage and lost profits from Russia’s invasion.
Payments under guarantees and suretyships are allowed. Ukrainian sureties/guarantors may now discharge the debt obligations of Ukrainian borrowers under foreign loan repayments allowed during martial law.
Ukrainian borrowers may now pay foreign sureties, guarantors, or security providers under their recourse claims after they have discharged the Ukrainian borrower’s debt obligations under foreign loans extended or guaranteed by IFIs or DFIs.
All currency restrictions on imports of works and services are cancelled. Cross-border payments are now allowed for all imported services, including penalties, indemnities, commissions, and other associated costs.
Foreign currency collection. State bailiffs may now collect foreign currency from state or state-owned companies and transfer it abroad to foreign creditors. The issue likely remains with private debtors.
Political Risk Insurance
Last year, the newly established Ukrainian Export Credit Agency (ECA) significantly expanded its operations, and supports monthly exports worth UAH 1.6 billion (approximately USD 38 million).
After the Ukrainian government approved terms for the ECA’s implementation of political risk insurance, the ECA created insurance products covering direct investment and investment loans. To qualify, entities receiving investment must be located in Ukraine and develop infrastructure and facilities for the processing industry and the export of Ukrainian products.
These changes enhance Ukraine’s business climate, create opportunities for domestic companies, and attract essential external support.
Material prepared by Olexiy Soshenko, Managing Partner, Sevastian Viktoruk, Associate, and Artem Mykhailyk, Junior Associate, for the 5th edition of LIR Ukraine (page 28).