The National Bank of Ukraine has expanded the opportunities for international financial institutions (IFIs) to use funds in domestic currency (hryvnia) to fund projects in Ukraine. On 31 March 2016, the NBU Board, in response to the request from the International Finance Corporation (IFC), issued Resolution No. 225 On Amendments to Some NBU Regulations.
The resolution amends the Rules Governing the Opening and Use of Funds Held in International Financial Organizations’ Current Accounts Opened with Authorized Banks (approved by NBU Board Resolution No 286, dated 19 May 2014). The resolution also amends the Instruction on the procedure of opening, usage and closing of accounts in domestic and foreign currencies (approved by NBU Board Resolution No. 492 of 12 November 2003).
This move will open broader opportunities for the operation of current accounts opened by IFIs with authorized banks.
From now on, IFIs will be able to use loans in domestic currency obtained from authorized banks to finance Ukrainian business. Up until now, IFIs have been allowed to issue loans using domestic currency funds obtained from the sale of foreign currency in Ukraine’s interbank market and funds received as proceeds from the placement of own bonds floated in Ukraine.
The outlined amendments shall apply to the International Finance Corporation and the Nordic Environment Finance Corporation.
The rules expanding the operation of IFIs’ current accounts in Ukraine shall apply to settlements under foreign investment operations, insurance contracts, payments to settle bills for goods, services, works. etc.
“This move by the NBU will enable international financial institutions to ramp up lending in domestic currency to Ukrainian enterprises, thus expanding access to financing (hryvnia loans) for Ukrainian business,” explained NBU Deputy Governor Mr Oleh Churii.
In particular, the International Finance Corporation expects that steps taken by the regulator will expand access to financing opportunities offered by the IFC for a wide range of Ukrainian companies and enable the latter to extend the maturity of existing loans. “Long-term resources offer opportunities for economic modernization and growth. The IFC is one of the leading foreign investors in the Ukrainian private sector and our task is to support the country’s sustainable economic growth and help Ukraine unleash the potential of its private sector,” said Mr Rufat Alimardanov, IFC's Country Manager for Ukraine and Belarus.
The amendments shall come into force from 7 April 2016.
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