NBU takes note of Ukrainian govt's requests to help group of companies with Eurobond payments
MOSCOW. March 4 (Interfax) - The National Bank of Ukraine (NBU) has taken into account 15 government requests to ease restrictions and help certain large Ukrainian companies and holdings with settlements on Eurobonds and with Western creditors and will consider each request separately, the regulator's press service said in response to a request from Ukrainian media.
"The NBU will also pay attention to the performance of the relevant business groups both before and during the crisis. This is essential to understand whether a separate NBU authorization is indeed critically needed for each individual company," the press service said in its response.
The National Bank realizes that forex restrictions are not a market practice, but it is a forced effect of the crisis, which remains a key deterrent to investment inflows into Ukraine, rather than forex restrictions, it said. The anti-crisis measures enable the NBU to maintain macro-financial stability, which is critical for investment inflows into the country, the regulator said.
The NBU noted that at the same time forex liberalization remains one of its strategic priorities, for which in 2023 it elaborated a comprehensive Strategy for Easing Forex Restrictions, transition to greater exchange rate flexibility and return to inflation targeting, which is linked not to time limits, but to prerequisites, and the NBU is making efforts to form them.
The priority, in particular, is to allow repatriation of 'new' dividends as part of the first stage of easing restrictions, which is currently being implemented. The priority of the second stage will be, in particular, the repatriation of interest on 'old' loans, the regulator said.
"The National Bank remains a supporter of a comprehensive approach to easing restrictions in accordance with the Strategy. This is linked to the fact that the country's forex resource is limited, especially given the disrupted regularity of international funding. Granting individual permits to individual companies will require appropriate spending of the country's limited resource," the Central Bank's response says.
The National Bank emphasized that "this may substantially undermine the NBU's ability to form the prerequisites for easing forex restrictions for all."
The regulator said that more than 3,000 companies are expecting easing only in terms of restrictions on the repayment and servicing of external corporate debts. The NBU believes that such individual authorizations will distort the competitive environment and give certain companies advantages over others.
However, at the same time, the regulator noted that the limits of the aforementioned Strategy are flexible enough to allow for payments that are critical for preserving the defense capabilities and sustainability of Ukraine's economy.
"Given this, the NBU will consider each application of the government separately and make a decision only if these principles are met and only when the proper prerequisites are formed," the National Bank said.
The gradual easing of forex restrictions for everyone while maintaining exchange rate, price and financial stability will continue to be one of the NBU's priority tasks, the regulator said in its response.
As reported, the government by 15 executive orders dated February 6 and February 13 approved requests to the NBU to allow companies from the groups of Vodafone Ukraine, DTEK, Metinvest, Interpipe and Kernel to make payments from Ukraine on Eurobonds and other obligations to external creditors. The attached documents noted, in particular, that such decisions would help maintain investor confidence, save the companies, many of which are major exporters, forex funds and ensure their more efficient and stable operation in the future. According to experts' calculations, the total amount of the requests stands at over $1.8 billion.
At the same time, head of the International Monetary Fund (IMF) mission to Ukraine Gavin Gray sent a letter to the Ukrainian authorities, in which he said he doubts such an individual approach corresponds to the Strategy of Easing Forex Restrictions approved by the National Bank last summer in fulfillment of its commitments under the Extended Fund Facility (EFF) Arrangement. The Fund is also concerned about the relatively large amount of possible payments and the possible impact of such decisions on Ukraine's upcoming negotiations on restructuring sovereign Eurobonds with commercial creditors.