In late June 2023, the NBU made two additional exemptions from the restriction of payments from Ukraine abroad and allowed Ukrainian borrowers to make cross border payments to foreign lenders under additional categories of loans.

Key takeaways:

  • foreign lenders in existing and new loans backed by international financial institutions, export credit agencies, governments or government entities can now receive cross-border payments from Ukrainian borrowers;
  • foreign lenders can receive payments under any new financing from Ukrainian corporate borrowers, subject to certain conditions.

Loans with the participation of IFIs, foreign states and export credit agencies

Before 16 June 2023, while cross-border payments by Ukrainian entities directly in favour of IFIs were allowed, many payments having a similar economic background remained under the general ban imposed by the NBU at the outset of the full-scale Russian invasion. This created an obstacle to many new financing that was otherwise available to the private sector in Ukraine from lenders with the backing of IFIs, ECAs, foreign governments and governmental agencies.

Starting from 16 June 2023, the NBU made an additional exemption from cross-border payments ban to facilitate this type of financing and lenders under eligible loans are allowed to receive cross-border payments from Ukrainian borrowers.

Eligible loans and payment requirements

Existing and future direct loans provided by any of the following entities ("Eligible Entities"):

  • an export credit agency;
  • foreign government acting through an authorized agency; or
  • foreign legal entity where that among shareholders of such entity is a foreign state or a foreign bank with state shareholding.

Existing and future loans from other lenders if they have the following coverage:

  • guarantee or suretyship of an IFI;
  • guarantee/suretyrship, insurance coverage of any of the Eligible Entities.

Payments under the eligible loans may only be made on existing due dates, which means that early payments due to acceleration, amendments to the payment schedule, etc. are prohibited.

New loans

With effect from 21 June 2023, the NBU introduced a further exemption from the cross-border payment restrictions aimed at enabling new financing on a wider scale. Now any foreign lender under any new loan will be able to receive payments to its foreign accounts from a Ukrainian corporate borrower, subject to the following conditions:

  • the loan is disbursed on or after 21 June 2023;
  • disbursement is made from an account outside of Ukraine (i.e., loans made with funds held by a foreign lender in a Ukrainian bank account would not qualify);
  • amount of payments allowed in connection with the loan (i.e., generally all payments other than principal) is capped at 12% per annum;
  • for loans with maturities of up to three years, Ukrainian borrowers may not purchase or borrow foreign currency locally to make loan payments (i.e., such borrowers may only use their own business foreign currency proceeds or borrow foreign currency from foreign lenders to service and repay the loan);
  • for loans with maturities of over three years, the same restriction applies to repayments of principal during the first three years of the loan; subsequently the borrower is free to purchase or borrow foreign currency for repayment of principal. For loan servicing payments purchasing foreign currency is allowed at all times.

Based on the above requirements, shorter-term loans (of up to three years) will become available for export-oriented Ukrainian businesses who have proceeds available in foreign currency. Businesses without such proceeds are forced to arrange for longer-term financing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.