Currency Regulation and Financial Services
Following its Resolution “On amendments to some legislative acts of the National Bank of Ukraine” No.685 from 30 October 2014, the National Bank of Ukraine has abolished the temporary ban on some foreign currency transactions contained in the Resolution of the Board of the National Bank No.540 dated 29 August 2014.
Background: On 22 September 2014 the NBU Board issued Resolution No.591, which amended Resolution No.540, which, among other things, provided for a ban on foreign currency transactions until 2 December 2014, if:
• there was a settlement of import operations without the importation of goods into the territory of Ukraine;
• payments under import contracts under which the product was imported into the territory of Ukraine occurred more than 180 days before.
These restrictions, given the lack of a transition period were critical to business. Thus, it became impossible for Ukrainian businesses to complete their obligations to foreign contractors regarding the payment for previously imported goods under customs import declarations of which date of execution is more than 180 days. According to EBA members, Ukrainian banks perceived a prohibition on foreign currency transactions from the clearing and settlement of transactions without import goods into the territory of Ukraine as prohibiting prepayment under foreign economic import contracts.
Moreover, under threat were payments in foreign currency for the use of services that were provided by non-residents outside of Ukraine (including marketing, advertising, consulting, insurance, with the implementation of software and other services).
This situation has hurt the reputation of Ukrainian companies as being reliable business partners in foreign economic relations. The EBA has consistently and for a long time made extensive efforts to revoke these prohibitions as soon as possible. We sent the NBU a number of letters with a detailed justification of the business problems that arose due to the provisions of Resolution No.591, and submitted an open letter to the leadership of the National Bank. Besides, the position of the Association has been repeatedly voiced during the meetings with representatives of the NBU.
We sincerely welcome NBU Resolution No.685, which will come into force on 3 November this year and we would like to thank the leadership of the National Bank for hearing the voice of business, and for lifting the two most painful and controversial bans. At the same time, the Association will continue to defend the interests of business and hopes that soon the situation in the country and in the foreign exchange market will allow the National Bank to reverse other restrictions on the business community!