Liberalization of Currency Restrictions

The Board of the National Bank of Ukraine has adopted a relevant resolution. The resolution lifts a number of restrictions on foreign currency transfers by Ukrainian residents abroad, which were imposed by the NBU on 24.02.2022 due to the Russian full-scale invasion. Such steps are being implemented as part of the NBU’s strategy adopted in the summer of 2023. The liberalization of currency restrictions is driven by the stabilization of the Ukrainian economy and the government’s efforts to increase Ukraine’s economic and investment attractiveness through free trade.

Most of the changes entered into force on 04.05.2024, except for the permission to repatriate dividends, which will become effective on 13.05.2024.
Please find more details on the abolished restrictions below.

1. Payment for imports of goods, works and services

   Starting from 04.05.2024, there are no longer any restrictions on payment in foreign currency for imported goods and services purchased from non-residents.
   Thus, Ukrainian residents will be able to pay for any works and services provided by foreign companies. Payment for imported goods is allowed without restrictions, provided that the delivery is made after 23.02.2021.

   As a reminder, previously the list of goods, works and services for which payment was allowed was determined by a government decree on “critical imports”, which is now expected to be canceled.

2. Repatriation of dividends

   Starting from 13.05.2024, Ukrainian companies will be able to repatriate dividends on corporate rights or shares accrued for the period from 01.01.2024 and pay them in favor of non-residents in foreign currency.

   This change does not apply to dividend payments from retained earnings for previous periods or reserve capital. It also set a monthly limit for the repatriation of new dividends at the equivalent of €1 million.

3. Leasing and renting

   Starting from 04.05.2024, there are no restrictions on foreign currency transfers abroad for payment under leasing/rental agreements. Previously, only payments for leasing/rental of vehicles were allowed.

4. Repayment of new foreign economic loans

   Starting from 04.05.2024, the NBU simplified the conditions for residents to purchase foreign currency to repay foreign loans, the funds for which are received in foreign currency from abroad after 20.06.2023 to the borrowers’ accounts in Ukrainian banks.

   The minimum period for using a “new” loan, after which it is allowed to purchase foreign currency to repay such a loan, was reduced from 3 years to 1 year.

   Accordingly, the prohibition on purchasing foreign currency to repay “new” loans will apply only to repayment of loans with a maturity of up to 1 year.

   The NBU will also allow businesses to purchase foreign currency to pay interest on “new” loans, regardless of the term of the loan.

5. Repayment of interest on “old” foreign economic loans

   Starting from 04.05.2024, it is allowed for resident borrowers to make foreign currency transfers abroad to pay interest payments on “old” foreign loans payable from 24.02.2022.

   Such transactions are allowed if the borrower has no debt as of 24.02.2022. In addition, the limit for such transfers is set at €1 million per quarter. Early repayment or restructuring of overdue payments remains prohibited.

6. Transfers from representative offices to foreign companies

   Starting from 04.05.2024, the NBU allowed representative offices of international card payment systems and foreign airlines to purchase and transfer foreign currency abroad to the account of a non-resident parent company.

   The monthly limit is set at €5 million.

Overall, the NBU’s liberalization of foreign exchange transactions should significantly expand the foreign economic capabilities of Ukrainian businesses; confirm that Ukraine’s economy is stabilizing and ready for competition; and increase Ukraine’s investment attractiveness for foreign capital. At the same time, the withdrawal of foreign currency assets abroad may cause fluctuations in the hryvnia exchange rate, which are expected to be controlled by the NBU through other instruments of influence.