5 Ukrainian companies may be allowed to withdraw foreign currency to repay foreign debts: international partners opposed

Since the beginning of the full-scale war, the National Bank has imposed restrictions on the export of currency abroad for private business, even when it comes to the repayment of foreign debts. However, the government of Ukraine is ready to make concessions to large companies.

This is stated in the material of «Economic Truth».

At the beginning of February, the government adopted a number of decisions that allow almost 2 billion dollars to be taken abroad to service the debts of five large groups of companies: «DTEK», «Metinvest», «Kernel», «Interpipe» and «Vodafone».

How much money companies want to transfer abroad. «Economic Truth» infographic

Why companies need an exception to currency restrictions

In the European Union, it is much more profitable to borrow funds in foreign currency, in contrast to the Ukrainian market. This was especially beneficial at the beginning of 2022, when the world was in a period of historically low interest rates. Therefore, Ukrainian business actively entered the international capital markets.

The National Bank's decision to ban the export of foreign currency could lead to defaults by companies that raised funds abroad. However, companies still found ways to keep paying their debts. In part, this was possible due to the fact that large Ukrainian businesses did not return foreign exchange earnings from exports to the country.

«Meeting financial obligations to foreign banks is what business can and must do in the conditions of war to support Ukraine's economy and positive investment reputation,» the Kernel company noted.

Instead, the National Bank opposes individual decisions that are not made for all market participants. According to the NBU, permission to export foreign currency to individual companies will distort the competitive environment and demotivate businesses that do not receive such permission.

In addition, it may affect the amount of international reserves. Due to the decrease in the flow of international aid to the Ukrainian budget, the volume of international reserves will gradually decrease starting in August 2023.

Apart from the National Bank, international partners also opposed granting permits to large Ukrainian companies. The head of the IMF mission in Ukraine, Gavin Gray, sent a letter to the authorities asking them to withdraw the petition to the NBU regarding five companies.

Currently, companies continue to wait for the National Bank's decision on granting individual permits for currency transfers. However, in a comment to «EP», interlocutors at the National Bank hinted that companies for which the government has applied for a permit to bypass currency restrictions will be able to get it only after these restrictions are lifted for everyone.

We will remind, in February the official exchange rate of the National Bank of Ukraine rose to its historical maximum. As of February 21, the dollar to hryvnia exchange rate was 38.4756 hryvnias/dollar.