The National Bank of Ukraine (“NBU”) recently allowed Ukrainian borrowers to transfer foreign currency (“FX”) funds abroad to fulfil their obligations under the following categories of loans from foreign lenders:
- loans backed by way of guarantee or surety from international financial institutions (“IFIs”);
- loans granted, insured or backed by way of guarantee or surety from foreign export credit agencies (“ECAs”) or foreign states through authorised institutions or foreign companies
- which have a foreign state or a foreign state bank among their shareholders; and
- new loans granted after 20 June 2023 by foreign lenders by way of disbursement of such loans to Ukrainian borrowers’ bank accounts opened with Ukrainian banks.
To recap, following the Russian invasion of Ukraine, the NBU introduced a moratorium on FX cross-border payments for the period of martial law in Ukraine. As a result, repayment of FX loans from foreign lenders was and remains prohibited unless such repayment falls within the exhaustive list of statutory exemptions.
Exemptions for the first two categories of loans took effect on 16 June 2023. As a result, Ukrainian borrowers have been granted the opportunity to repay these categories of loans (including both principal and interest) under the terms of their respective loan agreements.
Exemptions for the third category of loans took effect on 21 June 2023. Ukrainian borrowers would be able to transfer the funds for fulfilling obligations under such loans, subject to compliance with the following cumulative conditions:
- the maximum interest rate under such loans should not exceed 12% per annum;
- borrowers must repay the loans with maturities of up to three years with their own funds;
- if the maturity period of the loans exceeds three years, the borrower may purchase FX for the repayment of principal, interest, commissions, fees and fines starting with the fourth year only.
At the same time, for all three categories of the above mentioned loans, the NBU prohibited (a) early repayment of such loans and (b) amendment of loan agreements to shorten the repayment periods.
Such comprehensive approach to easing certain FX restrictions, together with establishing the corresponding preventive measures, should allow Ukraine to attract more loan inflows, surpassing the outflows from loan repayments.
By Mariana Veremchuk and Yaroslav Pavliuk, Associates, Avellum