Foreign investors should think about investing in Ukraine and govt bonds - NBU governor

MOSCOW. April 17 (Interfax) - The macro-financial stability that has been achieved, as well as agreements and obligations that Ukraine has signed over the past six months, give foreign investors enough knowledge to predict what the National Bank, government, parliament will do and think about investing in Ukraine at this stage already, National Bank of Ukraine Governor Andrei Pyshny said.

"I think the private sector could think about starting to move towards Ukraine somewhat, given the opportunities for investment," he told Ukrainian media in Washington.

He singled out financial sector strategy, corporate governance, military and political risk insurance.

"The large program with the IMF already lessens the uncertainty," Pyshny said.

He said that in the $115 billion program's baseline scenario, the financial gap in financing on the program's four-year horizon would be covered by a package of financial support by donor coalition countries.

"It seems to me that there is already enough new relevant information that reduces the uncertainty, and, accordingly, the opportunities for repatriating earnings. Surely it's worth investing in domestic government bonds and looking at the market?" Pyshny said.

Commenting on the restrictions on repatriating capital, Pyshny said it was accurate to talk not about a ban on repatriation, but, on the contrary, about its gradual relaxation.

"The right connotation is important, because we have not abandoned repatriation. On the contrary, we have opened one of the outlets - the opportunity to repatriate what non-residents earn by investing in domestic government bonds," he said.

He said this was a further incentive to support demand in the domestic debt market, which is a condition for putting an end to monetary financing and will stop international reserves, which are replenished exclusively with international assistance, from becoming depleted.

Pyshny said the time to lift the non-residents had not yet come, although international reserves were at an 11-year high.

"This cannot yet be sourced in the economy's recovery. We see a trend towards an improvement in the balance in the currency market, we see tentative, positive macroeconomic signals, but this trend has to look like a sustainable trend. The risks have not gone away, but minimizing the impact and effective risk management will prepare the ground to restore regulation and bring back foreign private investors," he said.

He said that addition to repatriation, the private sector needed a stable macro-financial and macroeconomic situation, a steady downward trend in inflation, a stable banking sector and its smooth operation, so repatriation is necessary but not sufficient.

The National Bank in March revised its preliminary decision and denied non-residents the opportunity to repatriate funds from the redemption of government bonds, allowing only the repatriation of interest. The International Monetary Fund says in materials that the repatriation of the principal amount could require the sale of $1.56 billion in 2023-2027, while the repatriation of interest would require about $120 million by the end of this year.