Ukrainian President Petro Poroshenko has signed a law on foreign currency controls that simplifies currency operations for individuals and businesses.
The president signed the law during a meeting with businesses at the InterContinental Kyiv hotel on July 4. The Ukrainian parliament passed the new law on June 21.
The liberalization of foreign currency controls was one of Ukraine’s commitments under the political and economic association agreement it signed with the European Union.
The new law replaces the Currency Regulation and Control Decree, which has been in force since 1993, which set tight restrictions on foreign currency operations and imposed severe sanctions on those who violated them.
The new law, is expected to attract investors to the country, as it introduces more freedom of currency transactions, transparency, efficiency, and independence in regulation of the currency market.
“Reform and simplification of the existing rules are long overdue, and I think the… action is a positive step. It also removes opportunities for graft,” London-based analyst Timothy Ash told the Kyiv Post.
The document allows both residents and non-residents of Ukraine to conduct all types of foreign exchange operations. Also, Ukrainian residents and business entities can now acquire foreign currency abroad, relocate, and transfer it. Non-residents, foreign entities and their branches in Ukraine are allowed to open accounts in local banks and conduct currency operations through them.
Maria Repko, the deputy director at Centre for Economic Strategy, says that the law is fundamentally new for Ukraine and it changes “the spirit of the legislation.”
“In the global world it is one of the key things necessary for economic development,” Repko told the Kyiv Post.
But although the law breaks new ground in promoting economic liberalization, the specific rules for conducting currency operations still have to be set by the National Bank of Ukraine, or NBU, and these might be not as liberal, Repko says.
According to the law, the set of rules is to be published by the NBU in six months.
Sergey Fursa, a specialist of sales of debt securities at investment firm Dragon capital, believes that the NBU will make the rules as liberal as possible, considering the current circumstances.
Ukraine’s financial system used to be closed and did not let foreign capital freely flow into the country, Fursa said. The new law, however, will change that, and will improve the investment climate because of the simplification of financing, he said
