NBU's currency liberalization will comply with 'new money-new conditions' principle, volume of old obligations too large
During the war, the National Bank of Ukraine (NBU) is carrying out currency liberalization according to the principle of "new money - new conditions", it is impossible to remove all restrictions introduced at the beginning of the war due to the too large potential demand for currency, the heads of the regulator said at a briefing on June 5.
"For two years now, the rule that the National Bank implemented back in July 2023 has been in effect, the essence of which is that new money invested in Ukraine is new conditions, and these new conditions do not provide for any restrictions," said NBU Governor Andriy Pyshnyy.
On the basis of the information wave raised by the comments of representatives of some large companies, he advised them to delve into the regulations that the NBU adopts regarding currency liberalization.
"New money means new conditions. And this means that if new borrowings occur, then the restrictions that were introduced as a result of the full-scale invasion in February 2022 do not apply to these new borrowings," Pyshnyy emphasized once again.
NBU Deputy Governor Yuriy Heletiy recalled that in May last year, the regulator allowed servicing new loans provided that the principal repayment term is more than a year and the servicing rate does not exceed 12%, so that there are no schemes for overstating interest rates and withdrawing currency.
In addition, last year, large businesses were given the opportunity to service eurobonds: to pay coupons, including retrocoupons, at the expense of their own currency, as well as to service scheduled interest and overdue interest within the limit of EUR1 million per month.
"We need to look for and find the right balance - which, in our opinion, we are doing quite well - between satisfying the interests of business, increasing business activity and preserving our reserves in conditions of uncertainty. We cannot allow reserves to be consumed in conditions of war," emphasized Heletiy.
According to him, if we assume that at one point the NBU would allow servicing external debt - to pay in principal and interest, the burden would be $14 billion in principal and $7 billion in interest.
"Business asks: allow us to pay for customs declarations. Exposure – $3.5 billion. Dividends, I think that the outflow through this channel would be about $10 billion if we allowed 2022, 2023, 2024 without restrictions. That is, we must look for appropriate balances. We find them," said the deputy chairman of the NBU.
He called on large businesses that have structures abroad and invest in businesses abroad to attract capital to Ukraine, have the opportunity to close debts within the investment limit, pay for their representative offices, and settle for old customs declarations.
"That is, there is a maneuver. But it seems to me that business, first of all, should better process our liberalization measures, contact us for clarifications, in order to understand, perhaps, the details of the latest decisions. And we will do this additionally," said Heletiy.
He added that the National Bank recently adopted another stimulus package: it expanded the possibility of financing foreign representative offices, allowed businesses to buy currency and transfer it abroad for legal proceedings, which will allow for better progress in restructuring.