Business met with the NBU Governor and management
Yesterday, the EBA business met with NBU Governor Andriy Pyshnyy, Deputy Governor Yuriy Heletiy, directors and specialists of specialized departments.
They discussed currency regulation, the results of 2023, and plans for 2024 in this context. In particular, the NBU Governor emphasized that the country did a good job in 2023 – the economy grew by more than 5% and inflation fell to 5%.
In 2023, Ukraine received USD 43 billion in international aid (almost a third of the funds were grants), which is USD 11 billion more than in 2022. Thanks to the transition to a regime of managed exchange rate flexibility, the multiplicity of exchange rates is also now a thing of the past (for example, the difference between exchange rates has decreased to 1-2% from 10-11% a year ago). The balance between supply and demand for foreign currency has improved (thanks, in particular, to the operation of the sea corridor with the support of the Armed Forces).
The regulation of the gambling business increased state budget revenues 14 times compared to 2022 and 50 times compared to 2021, to UAH 10.4 billion.
At the same time, one of the most important challenges that the regulator sees is the return of export revenues to the state. This issue is being addressed at the highest state level. To counteract black exports, the NBU has strengthened the banks’ discipline in currency supervision of such transactions, as well as communication with the tax and customs services. The NBU also reduced the deadlines for settlement of agricultural export transactions from 180 to 90 days.
The NBU’s move toward currency liberalization is part of the Strategy for easing currency restrictions, moving to greater exchange rate flexibility, and returning to inflation targeting. In 2024, the NBU plans to complete the first stage of easing restrictions (repatriation of “new” dividends) and gradually move to the second stage of currency liberalization, which is supported by the community (interest payments to foreign creditors, etc.). Businesses also emphasized the importance of these steps. There is also a request from businesses regarding the hryvnia held in the accounts of international companies in Ukraine. However, further progress in implementing the Strategy is possible only when the necessary preconditions are in place, so the NBU will work to ensure that they are met. This will have a positive impact on business in Ukraine in 2024.
In general, the relevant NBU Resolution No. 18 contains about 60 exceptions or restrictions. The Government also has the opportunity to submit a specific request – what kind of mitigation and how to change it.
As for the forecasts for 2024, an important assumption of the NBU’s baseline scenario is that Ukraine will receive a sufficient level of international assistance. The expected amount for this year is USD 37 billion. This week will be extremely important in terms of international aid, as the US will decide on an international aid package. This year’s risks are concentrated in terms of receiving international aid, so Ukraine must increase its resources.
Inflation will accelerate in 2024 (currently at 5.1%), but the NBU understands how to work with this to bring inflation back to the target range of 4-6% in 2025, and to the 5% target in 2026.
In conclusion, the NBU Governor once again emphasized that the regulator is committed to helping Ukrainian businesses find development opportunities. The NBU also convinces the IMF of the importance of currency liberalization. However, private capital will not come if the country is stormy. That is why it is so important to comply with the established requirements and rules and maintain macro-financial stability. However, it is also important to talk about what is preventing us from doing so and to work together to develop effective solutions.
On behalf of the business community, we would like to thank the NBU Governor and management for their willingness to engage in a dialog and look forward to further cooperation. Also, at the end of the meeting, the business emphasized that it would be good if law enforcement agencies improved their efficiency and interaction with business, which would help stimulate the Ukrainian economy! In addition, working with investors is important – and although it is not a priority for the NBU, the regulator must understand and accept this as its work.