On September 3rd, 2015 the National Bank of Ukraine (NBU) extended regime of foreign currency restrictions until December 4th, 2015 in its Resolution №581 (Resolution), which entered into force on the day following the adoption. Such regime was introduced by the NBU the previous year and was updated twice this year.

Most of the established restrictions, which can be accessed in our previous newsletters, remain in effect.

In addition to some "cosmetic" indulgences, such as, for example, raising the threshold from 15 to 20 thousands of hryvnia for cashing out in foreign currency from any and all banking accounts opened in one bank, through ATMs and cash desks per day we draw your attention to the most important changes.

  1. The NBU allowed transfer of foreign currency to legal entities up to 50 thousands of US dollars within one calendar month under single individual license. The NBU introduced the rule in August 20 and implemented it again in the Resolution. Such step is considered to be one of the most significant liberalization signs in this sector over the last year.
  2. The NBU brought some common sense to certain requirements related to export-import operations.
  1. In particular, it is important that the NBU allowed to set off counter claims on export transactions. However, it still does not cover the operation, expressed (a) in the currency of the 1st category of the Classificator or Russian rubles, or (b) in other currencies, if the total amount of obligations terminated under a single export contract exceed the equivalent of 500 thousands of US dollars.
  2. The NBU waived the requirement to provide a certificate from the State Fiscal Service about the absence of tax debts for the purchase of foreign currency in order to make settlements under the import transactions.
  3. The NBU allowed legal entities purchase foreign currency without taking into calculation their own currency funds (a) of the 3rd category of Classificator, or (b) deposited by the Association of International Road Carriers of Ukraine for performing warranty obligations on operations with TIR books. Be kindly reminded that legal entity may purchase foreign currency for payments only if foreign currency on its account is less than the equivalent of 25 thousands of US dollars.

Resolution of the NBU introduced additional limitation on purchase of foreign currency to pay for import, when customs clearance is conducted before January 1, 2014. Shall there be a replacement of the debtor or the creditor thereunder, such obligations may be performed only at the expense of own foreign currency funds. Though, this requirement, does not apply to import of vital goods (“emergency import”) as listed in the Law "On Stabilization Measures for payment balance of Ukraine in accordance with Article XII of the General Agreement on Tariffs and Trade 1994".

  1. The NBU also supported the restriction imposed on August 20 with regard to replacement of the party to the facility agreements executed with non-residents as well as assignment of the rights of claim to non-resident under the facility agreements executed between residents of Ukraine. The NBU will refuse to perform registration of changes to such contracts. Exception to this rule shall cover transaction (i) with participation of certain international financial institutions or (ii) on replacement of the debtor in connection with its accession to the new debtor-assignee or liquidation of the initial debtor. In exceptional cases, the NBU can take a separate decision on registration of changes to the facility agreements as a result of assignment, debt transfer or replacement of the party between parties related by control.

The latter limitation deserves some questions from the market. Regardless its efficiency, from the legal perspective it appears the NBU with no general legislative power in fact limits with its regulatory decisions implementation of civil rights of the parties to the contract as they are established by civil and commercial laws of Ukraine.

Against such restrictions, the proposed liberalization steps appear to be very slow. Thus, it is too early to discuss any serious steps in the current conditions of Ukrainian currency market, which is still very unstable.