EBA asks Ukrainian govt, National Bank to allow paying up to $3 mln as monthly interest to foreign creditors

MOSCOW. April 17 (Interfax) - The European Business Association (EBA) has asked Ukrainian Prime Minister Denis Shmygal, National Bank head Andrei Pyshny and First Deputy Prime Minister Yulia Sviridenko to lift the ban on interest payment to foreign creditors, adding that such payments should be limited to $3 million or a fifth of the amount envisaged by one contract (whichever is smaller) per month, the Ukrainian media said with the reference to the EBA press service.

The impossibility of transfers to foreign creditors may potentially lead to default, which will affect the financial status of companies and the reputation of Ukrainian issuers, the EBA said.

In turn, corporate default may prompt investors' demand for early repayment of the entire debt and litigation with a potential freeze on assets and operations.

"The government and the Finance Ministry plan to further honor their commitments and wish to preserve constructive relations with creditors so that they are able to draw funds after the crisis for the recovery of Ukraine. It is equally important that Ukrainian businesses retain the reputation of a reliable partner in the eyes of international financial institutions," the statement said.

That will also allow businesses to draw soft loans during Ukraine's recovery, the EBA said.

Before the crisis began in 2022, the Ukrainian National Bank adopted a resolution on bank operations amid martial law. Clause 14 of the resolution prohibits banks from cross-border transfers to correspondent accounts of non-resident banks in hryvni or foreign currency, the EBA said.

The restrictions imposed by this resolution have significantly complicated the operation of international payment systems in the Ukrainian territory, it said.