Ukraine eases some wartime capital controls for businesses

UKRAINE’S central bank eased some foreign exchange restrictions for businesses, a move it called the biggest currency market liberalisation since Russia’s full-scale invasion in 2022. 

The loosening of capital controls follows the long-awaited approval last month of a US$61 billion Ukraine assistance package from the US, which includes US$7.8 billion in budget support. It also comes as Washington and its partners are in talks over tapping interest income from roughly US$280 billion in frozen Russian assets to also help support Kyiv. 

The new measures include allowing companies to repatriate dividends earned since Jan 1, capped at the equivalent of 1 million euros (S$1.45 million) per month, and to make payments of as much as 1 million euros per quarter in interest payments on foreign loans made before February 2022, the central bank said in a statement posted on its website on Friday night (May 3).

The central bank also eased restrictions on purchasing foreign currency to repay loans taken after June 2023, and lifted currency exchange restrictions on services imports.

Earlier this year, the National Bank of Ukraine disregarded a government request to allow several privately held firms to make large repayments to bondholders amid uncertainty over foreign aid, a decision supported by the International Monetary Fund, which is helping coordinate international assistance. 

The changes “should not create additional risks for macro-financial stability and stability of the foreign currency market”, the central bank said in its statement.

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The government is likely to receive a total of US$38 billion in financial assistance this year, boosting Ukraine’s international reserves to US$43.4 billion by year-end, compared with an earlier forecast of US$40.4 billion, according to the central bank. BLOOMBERG