Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

UKRAINE

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of April 30, 2005)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: September 24, 1996.
Exchange Arrangement
CurrencyThe currency of Ukraine is the Ukrainian hryvnia.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe National Bank of Ukraine (NBU) sets the official exchange rate of the hryvnia against the dollar on the basis of quotations on Ukraine’s interbank foreign exchange market. The NBU intervenes with a view to curbing drastic fluctuations in the exchange rate and the hryvnia has remained within a very narrow band vis-à-vis the dollar since the end of 2001. The official exchange rate is used by residents and nonresidents to account for foreign exchange transactions.
Effective March 6, 2005, banks are permitted to buy or sell foreign exchange cash without fixed margins vis-à-vis the NBU rate. Previously, on October 15, 2004, banks that were authorized to engage in foreign exchange transactions were prohibited from buying or selling foreign exchange cash at a rate that deviated more than 2% from the official NBU exchange rate. Cash foreign currency bought from the NBU could be resold to the NBU within two months at the original purchase price. Effective November 21, 2004, all banks with foreign exchange licenses may purchase foreign currency with hryvnia from the NBU for their needs and those of their customers other than banks. Previously, eight smaller banks had been barred from purchasing foreign exchange from the NBU.
Effective November 30, 2004 until December 31, 2004, asset transaction volumes (other than those involving government or NBU securities, or interbank transactions) could not exceed the level of November 30, 2004. Foreign exchange sales by banks could not exceed the equivalent of $1,000 for cash transactions and $50,000 for noncash transactions, except with the written consent of the bank manager (or authorized agent). Time deposits (domestic and foreign currency) may not be withdrawn prior to maturity. Effective February 3, 2005, banks no longer need to report requests accepted from clients for purchases of more than $100,000 in foreign currency. Previously, on December 2, 2004, banks were required to provide such information before noon on the day of the purchases. Banks that do not provide such information may not be allowed to make purchases in the market. Effective December 2, 2004, banks are prohibited from supplying cash foreign exchange or traveler’s checks to foreign exchange bureaus opened by legal entities on the basis of agreements with banks. Effective December 11, 2004, banks that have the right to open correspondent accounts at foreign banks must purchase foreign currency in the interbank market directly, not through other Ukrainian banks.
Exchange taxEffective January 1, 2004, a 1.5% fee is collected on purchases of noncash foreign exchange; the proceeds are used for government pension insurance.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsPayments to and receipts from all countries are settled in foreign currencies, except that settlements for trade with CIS and Baltic countries may also be made in domestic currencies as well.
Controls on the use of domestic currency
For current transactions and paymentsResidents may conduct settlements with nonresidents in hryvnias through hryvnia correspondent accounts opened with authorized Ukrainian banks by nonresident banks, but they must provide the servicing bank with a certificate from the State Tax Administration (STA) showing that no tax liabilities are outstanding on the date of the transaction. An NBU license is required if the due date for the delivery of imported goods and services, or of proceeds from exports, exceeds 90 days.
For capital transactions
Transactions in capital and money market instrumentsYes.
Transactions in derivatives and other instrumentsIn certain instances, authorization is required from the State Securities and Stock Market Commission.
Credit operationsCommercial credits in hryvnias are extended to economic agents of CIS and Baltic countries only. An NBU license is required if the due date for the delivery of goods and services exceeds 90 days.
Use of foreign exchange among residentsAn NBU license is required.
Payments arrangements
Bilateral payments arrangements
InoperativeThere are arrangements with the Baltic countries, Russia, and the other FSU countries.
Regional arrangementsYes.
Barter agreements and open accountsBarter is one of the forms of trade for Ukrainian companies in their transactions, used largely with the Baltic countries, Russia, and other countries of the FSU. The use of barter in foreign trade transactions is prohibited for a group of goods determined by the Ukrainian Cabinet of Ministers.
Administration of controlThe NBU, authorized banks, the STA, the State Customs Service, the State Committee of Communications, and the Ministry of Economy and European Integration of Ukraine administer exchange controls.
International security restrictions
In accordance with UN sanctionsRestrictions are maintained on payments and on the provision of financial services to Eritrea, Ethiopia, Iraq, Liberia, the Taliban, and the UNITA movement in Angola.
Payments arrearsn.a.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents are required to obtain a license from the MOF to deal in precious stones and metals, except for bank metals. The NBU licenses commercial bank transactions in bank metals.
Controls on external tradePermission for residents to export precious metals and precious stones is granted by the Ministry of Economy and European Integration in consultation with the MOF. Bank metals are imported only by authorized banks and do not require NBU permits. Only nonresidents legal entities are permitted to export bank metals in the form of coins using a license issued by the NBU.
Controls on exports and imports of banknotes
On exports
Domestic currencyResident individuals may export up to HRV 11,000 and nonresident individuals may export up to HRV 10,000, including jubilee and commemorative coins made from precious and nonprecious metals in the amount of HRV 5,000. Residents may make an oral declaration for exports of amounts up to HRV 11,000, but must make a written declaration for the entire export if the amount exceeds this level. Nonresidents are required to declare all exports. An individual NBU license is required for exports above these limits. Resident legal entities that own, lease or charter means of transportation may export up to HRV 3,000 through authorized persons aboard the means of transport, subject to mandatory written customs declaration. They may also export proceeds received, if accompanied by supporting cashier documents. Nonresident legal entities must obtain an individual NBU license.
Foreign currencyResident and nonresident natural persons departing from Ukraine for tourism or personal business are permitted to export monetary funds (foreign currency, or checks in foreign currency) up to the equivalent of $6,000. On the basis of an oral declaration, residents may export up to the equivalent of $3,000, while nonresidents may export $1,000. Exports in excess of these limits require written declarations of the entire amounts of exports and bank statements indicating the debiting of an account or purchase of foreign currency.
A written declaration is also required for exports by residents or nonresidents of 100 grams of bank metals in ingots, and for the export by nonresident individuals of checks issued by foreign banks or nonbank institutions. In addition, individuals may export funds, checks, and bank metals that were previously imported and declared to customs. Individuals in transit are allowed to export monetary funds up to $30,000 or its equivalent, bank metals up to 1,000 grams, and checks up to $30,000 provided that they had previously imported the monetary funds and submit documentary evidence of the transit nature of the travel. Resident individuals departing on official business may export upon verbal declaration up to the equivalent of $3,000 in cash and/or traveler’s checks and nonresidents the equivalent of $1,000. Exports of the following require a written customs declaration: (1) up to the equivalent of $10,000 in cash and/or traveler’s checks, and (2) checks that were sent into Ukraine and are payable to nonresidents who are leaving Ukraine.
Resident legal entities that own means of transport may export the following, provided they present a certificate from an authorized Ukrainian bank showing debits from an account and a written customs declaration: (1) funds up to the equivalent of $1,000 to cover settlements for goods and services; (2) funds up to the equivalent of $2,000 to cover operating expenses for motor vehicles abroad; and (3) funds up to the equivalent of $10,000 to pay for air and water transportation expenses. An individual NBU license is required for amounts exceeding these limits. The captain of a vessel belonging to or chartered by a nonresident is allowed to export foreign currency (cash or traveler’s checks) to pay for operating expenses and crew services, as specified by the vessel owner based on a certificate from a bank showing the debiting of funds from an account of a resident marine agent and a written customs declaration. Nonresident legal entities are permitted to export foreign currency legally imported at an earlier date and received for goods sold and services provided on means of transport owned (chartered, leased) by them and making passenger trips on the territory of Ukraine, in an amount supported by cash documents, provided that a written declaration is made to customs authorities by an authorized person. In other cases, the export of foreign currency by nonresident legal entities requires an NBU license.
On imports
Domestic currencyResident individuals may import up to HRV 1,000 on the basis of a verbal declaration at customs. Effective March 1, 2004, nonresident individuals are permitted to import domestic currency up to HRV 1,000 with a written customs declaration or proof that the currency was previously exported from Ukraine legally.
Resident legal entities may import domestic currency up to the amount previously exported with a customs declaration, as well as proceeds received abroad from transportation. Nonresident legal entities require an individual NBU license.
Foreign currencyResident individuals are allowed to import up to the equivalent of $3,000 in cash and traveler’s checks, and nonresidents $1,000 in cash $1,000 in traveler’s checks issued by foreign banks, upon oral declaration. Imports by resident and nonresident individuals of the following require a written customs declaration: (1) funds previously exported legally from Ukraine; (2) up to the equivalent of $10,000; (3) up to the equivalent of $50,000 in checks issued by foreign banks and nonbanking institutions; and (4) up to 100 grams of bank metals in the form of ingots. NBU authorization is required for amounts above these limits.
Individuals in transit may import funds up to the equivalent of $30,000 in cash, up to $30,000 in checks, and up to 1,000 grams of bank metals, subject to documentary evidence of the transit nature of the travel and a customs declaration. Nonresident legal entities owning, leasing, or chartering means of transportation are allowed to import foreign currencies up to the equivalent of $50,000 upon written declaration.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyCertain conditions apply to these accounts.
Held abroad
Approval requiredA license from the NBU is required to place foreign exchange assets in accounts opened abroad, except when the account is opened during a temporary stay abroad.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyAccount balances may be used to purchase foreign currency in cases where there exists a legal obligation in that currency.
Nonresident Accounts
Foreign exchange accounts permittedResident legal entities of Armenia, Azerbaijan, Belarus, Kazakhstan, Moldova, Russia, and Uzbekistan who open accounts with authorized Ukrainian banks must have approval from their respective central banks to open an account in Ukraine. Resident individuals of Belarus, Kazakhstan, Moldova, and Russia are required to have approval from their country’s central bank in order to open accounts in Ukraine, except during a temporary stay in Ukraine (for the purposes of study, medical treatment, or employment). Resident individuals of Uzbekistan must have approval from their central bank to open an account in Ukraine.
A nonresident investor may credit a foreign currency account with the following: (1) funds transferred from abroad for investment in Ukraine; (2) income (dividends) received by a nonresident investor from domestic investment activities, including those from unincorporated joint ventures and from securities transactions; (3) funds received as a result of partial or full termination by a nonresident of domestic investment activity; (4) funds transferred from a nonresident individual’s current or time deposit accounts with an authorized bank in Ukraine; (5) cash imported by a nonresident individual into Ukraine, upon presentation of an import customs declaration; and (6) foreign currency purchased in the interbank currency market for the repatriation of investment.
Nonresident investors may transfer funds from foreign currency accounts for the following purposes: (1) investment activities in Ukraine (including reinvestments); (2) settlements with customs authorities in cases provided for by law; (3) transfers abroad of income (dividends) received from investment activities in Ukraine and of capital in the event of termination of investment activity, and of balances that were transferred from a deposit account with an authorized bank in Ukraine; (4) payments for services of an authorized bank servicing an account; and (5) transfers of funds from one’s own deposit account at an authorized bank in Ukraine.
Funds may be credited to and debited from accounts opened to support activities, such as cooperative production and other joint activities with the participation of unincorporated nonresident investors, exclusively for purposes prescribed by agreements (contracts) on joint investment activity, including distribution of income between parties to an agreement (contract) in accordance with Ukrainian law.
Domestic currency accountsNonresident investors may credit domestic currency accounts at authorized banks with the following: (1) funds obtained from sales of foreign currency on the Ukrainian interbank market in connection with a foreign investment; (2) funds earned as income (dividends) from investment activity in Ukraine, including from unincorporated joint ventures and from securities transactions; (3) funds transferred from their own deposit accounts with authorized banks in Ukraine; and (4) other funds transferred from investment activity that is not in conflict with Ukrainian law.
A nonresident investor may transfer funds from a domestic currency account only for the following purposes: (1) investment activities in Ukraine, including reinvestments; (2) purchases of foreign currency on the Ukrainian interbank currency market for the transfer abroad of income (dividends) from domestic investment activities in Ukraine, or the full or partial repatriation of capital; (3) settlements with customs, tax, and other authorities in cases provided for by law; (4) settlements with residents with respect to joint investment activities; (5) payments for services of an authorized bank servicing an account; (6) transfers of funds to one’s own deposit account with an authorized bank in Ukraine; and (7) other payments stipulated by investment agreements or contracts that do not conflict with law.
P accounts may be opened for the permanent representative offices of a foreign companies firms, or international organizations established without the status of a legal entity, through which these nonresidents conduct all or part of their business activities in Ukraine. P accounts may be credited with the proceeds from current transactions from any economic activity in Ukraine.
N accounts may be opened for (1) official representative offices and representative offices of nonresident legal entities that represent their interests but do not engage in business activities in Ukraine; (2) representative offices of foreign banks; and (3) organizations or institutions (program or project management groups) that implement international or technical assistance programs and projects. N accounts may be credited with (1) proceeds from the sale of foreign exchange to the servicing bank in order to effect settlements associated with the maintenance of a representative office, including embassies and consulates; (2) for purposes stipulated by the charter of the international organization; or (3) for an organization or institution (program or project management group) to introduce implement assistance programs and projects or international assistance. All N account holders may purchase foreign exchange on the interbank currency market for the transfer of funds abroad to the account of the relevant entity whose interests they represent, including interest accrued on balances in these accounts.
Convertible into foreign currencyP account holders may (1) convert and transfer to a nonresident entity that they represent proceeds from the sale of goods or services in Ukraine, interest accrued on deposit accounts and balances in these type P accounts, and balances in accounts when ceasing activities in Ukraine; and (2) credit to their own account in foreign currency funds intended for labor compensation of nonresident employees and to provide payments for business trips abroad. Holders of type N accounts may use funds from these accounts to purchase foreign currency in the interbank currency market for the purpose of transferring them to (1) the account of the appropriate authority of a foreign state or the account of the nonresident legal entity whose interests are represented in Ukraine by the mission (transfers may also be made in the event of termination of the mission’s activities, as confirmed by the appropriate documents); or (2) their own foreign currency accounts with authorized banks for compensation of work performed by nonresident employees, for business travel, and for entertainment expenses abroad.
Nonresident individuals may convert and transfer abroad funds from hryvnia-denominated accounts.
Approval requiredYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance payment requirementsImporters must receive goods or services no later than 90 days from the date advance payment is made or a draft is provided. An NBU license is required if payment takes place more than 90 days in advance.
Documentation requirements for release of foreign exchange for importsTo purchase foreign currency in the Ukrainian foreign currency market for import payments, residents must provide the transacting bank with the import contracts involved. In addition, when a contract exceeds $10,000 or its equivalent in another foreign currency, a resident needs to obtain a certificate from the STA confirming information on the resident’s bank account from which the payment is to be made and the resident’s registration as a taxpayer, as well as the amount of the foreign currency to be purchased under the contract or agreement. A certificate from the STA is also required to transfer any amount of foreign currency to accounts of nonresidents registered in offshore zones. When transferring and/or purchasing foreign currency under reinsurance agreements with nonresident reinsurers, resident insurers, and resident insurance (reinsurance) brokers provide an authorized bank with notarized copies of these agreements, which have been approved by the body responsible for supervision of the insurance industry.
Domiciliation requirementsYes.
Preshipment inspectionInspection is not mandatory but may be undertaken by the Ukrainian Chamber of Commerce and Industry at the request of nonresidents.
Letters of creditYes.
Import licenses and other nontariff measures
Negative listYes.
Other nontariff measuresNontariff measures are limited to those carried out for national security or environmental protection reasons.
Import taxes and/or tariffsThere are three customs duty categories with a trade-weighted average rate of about 5% (including energy imports). The first category (preferred duty rate) applies to goods from countries with which Ukraine has free trade agreements, imports from developing countries, and imports from countries that have a preferential agreement with Ukraine. The second category (concessional duty rate) applies to imports from countries that have entered into MFN agreements with Ukraine. The third category applies to imports from other countries.
A VAT of 20% is levied on most imports, and some imports are subject to excise taxes.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsExporters must repatriate all proceeds in foreign currency or in hryvnias through domestic commercial banks within 90 days of the shipment of goods or rendering of services. An NBU license is required to extend the repatriation period for export proceeds beyond 90 days.
Surrender requirementsEffective April 1, 2005, the 50% surrender requirement on foreign exchange earnings by exporters no longer applies. Previously, there was a 50% surrender requirement for resident persons engaged in business activity with respect to foreign currency in Group 1 of the NBU’s Classification of Foreign Currencies and Bank Metals. Proceeds were required to be channeled for sale through the Ukrainian interbank currency market.
The NBU Board has the authority to introduce a 100% surrender requirement (previously, 50%), if necessary, to reduce pressure on the exchange rate.
Financing requirementsn.a.
Documentation requirements
Preshipment inspectionInspection is not mandatory but may be undertaken by the Ukrainian Chamber of Commerce and Industry at the request of residents.
Export licenses
With quotasGoods subject to voluntary export restraints or other international agreements and those falling under the “special export regime”—coal, precious metal scrap, and alcoholic beverages—are also subject to export quotas and licenses. The licenses required for these goods are, however, freely provided to exporters, except in the case of export licenses for precious metal scrap. For grain exports, sales must take place through the agricultural commodity exchange. Export contract preregistration is limited to goods subject to voluntary export restraints or antidumping actions. Registration of exports is automatic and for statistical purposes only.
Export taxesTaxes are applied to exports of sunflower seeds, livestock, skins, and hides.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersIn accordance with regulatory provisions related to anti–money laundering measures, when customers effect cash transactions involving HRV 50,000 and noncash transactions involving HRV 80,000 or more, which have one or more of the features of transactions subject to financial monitoring, a bank sends a notice regarding the transaction to the state financial monitoring body.
Effective November 13, 2004, resident individuals may transfer (1) the equivalent of $1,000 (previously, $600) in favor of persons permanently or temporarily abroad; (2) $600 for the purchases of foreign publications (previously, $500); and (3) $1,000 for other services provided by nonresidents (previously, $500).
Investment-related payments
Prior approvalIncome from domestic investments in Ukraine may be transferred abroad without restriction upon confirmation and payment of taxes due.
Payments for travel
Quantitative limitsLimits apply on the movement of domestic and foreign currency across the border of Ukraine.
Indicative limits/bona fide testYes.
Personal paymentsResident individuals may freely transfer foreign currency abroad for current noncommercial transactions as defined by norms set forth in current legislation.
Quantitative limitsDepending on the purpose of the transfer, transfers in excess of established norms require an NBU license.
Indicative limits/bona fide testYes.
Credit card use abroadResidents may use abroad credit cards that are issued by Ukrainian banks.
Other payments
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsProceeds, except those of a few organizations with international operations (i.e., those enterprises licensed by the NBU to place and use some funds from an account abroad for their maintenance, such as the national airlines), are subject to repatriation requirements.
Surrender requirementsEffective April 1, 2005, the requirement that 50% of proceeds in foreign currencies listed in Group 1 of the NBU’s Classification of Foreign Currencies and Bank Metals must be surrendered and sold in the interbank market no longer applies.
Restrictions on use of fundsYes.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsThese transactions must be registered.
Sale or issue locally by nonresidentsForeign securities may be traded in Ukraine once they have been registered with the State Securities and Stock Market Commission. They must be placed with a depository in the country of their origin and either listed on the stock exchange or cleared for trading in the trading information system in the country of their origin and listed with one of the following stock exchanges: the American Stock Exchange, the Frankfurt Stock Exchange, the New York Stock Exchange, the Tokyo Stock Exchange, the Toronto Stock Exchange, the Stock Exchange of Hong Kong, or the London Stock Exchange. Persons offering foreign securities for sale in Ukraine must provide Ukrainian investors with the opportunity to inspect the issue prospectus and the issuer’s report for the most recent fiscal year. An NBU license is required for the acquisition by residents of foreign securities in Ukraine.
Purchase abroad by residentsAn NBU license is required.
Sale or issue abroad by residentsYes.
Bonds or other debt securities
Purchase locally by nonresidentsPurchases must be registered. Authorized banks acquire bonds on instructions of nonresidents at auctions conducted by the NBU.
Sale or issue locally by nonresidentsThe regulations governing shares and other securities of a participating nature apply.
Purchase abroad by residentsAn NBU license is required.
Sale or issue abroad by residentsA resident issuer may place securities outside Ukraine on the basis of a permit from the State Securities and Stock Market Commission.
On money market instrumentsThe regulations governing shares and other securities of a participating nature apply.
On collective investment securitiesThe regulations governing shares and other securities of a participating nature apply.
Controls on derivatives and other instrumentsThere are controls on all transactions in derivatives and other similar instruments. Hedging is permitted for exchange rate risks arising from contracts between residents and foreign economic agents, provided that the hedging is conducted through banking institutions and the foreign currency involved is included in Group 1 of the NBU’s Classification of Foreign Currencies and Bank Metals. Transactions with other foreign currency derivatives (such as futures and options) for which the underlying asset is a foreign currency in Group 1 of the NBU abovementioned classification are prohibited. Transactions in the interbank currency market, with respect to future contracts for which the underlying asset is the exchange rate or cross-rate of a foreign currency are permitted; settlements on these contracts are in hryvnias.
Controls on credit operations
Commercial credits
By residents to nonresidentsAn NBU license is required if the repayment deadline exceeds 90 days.
Financial credits
By residents to nonresidentsThese transactions require a license and written permission from the NBU.
To residents from nonresidentsIndividuals are permitted to obtain credits from nonresidents after registering with the NBU. Such registration is not required for commercial banks if the credits have a maturity of one year or less.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsAn NBU license and a written permit are required for banks and financial institutions.
Controls on direct investment
Outward direct investmentDirect investments by residents abroad (including resident acquisitions of foreign securities in Ukraine and abroad) are subject to individual NBU licenses.
The acquisition of foreign securities by a resident is considered a portfolio investment and requires an NBU license.
Inward direct investmentAcquisitions of interest in a Ukrainian enterprise (including through the acquisition of securities) by a nonresident investor must be registered within three days after the investments are undertaken. Registration of foreign investments is administered by the Council of Ministers of the Autonomous Republic of Crimea and by the authorities of the oblasts and of the cities of Kiev and Sevastopol.
Foreign investments in Ukraine may be undertaken in any currency listed in Group 1 of the NBU’s Classification of Foreign Currency.
Foreign investments in most types of businesses are permitted, although licenses are required in some cases. Investments in insurance and businesses engaged in intermediation activities require a license from the MOF, and investments in the banking sector require a license from the NBU.
Controls on liquidation of direct investmentThe transfer of proceeds, after payment of taxes due, is not restricted.
Controls on real estate transactions
Purchase abroad by residentsThese transactions are considered foreign investments abroad and are subject to an NBU license. The acquisition and termination of property rights are determined by the country in which the property is located.
Purchase locally by nonresidentsThese transactions are considered domestic capital investments by nonresidents and must be registered as direct investments.
Sale locally by nonresidentsYes.
Controls on personal capital transactions
Loans
By residents to nonresidentsAn NBU license is required.
To residents from nonresidentsThese loan agreements must be registered with the NBU.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Transfer of assets
Transfer abroad by emigrantsTransfers by nonresident individuals are not restricted after settlement of tax liabilities.
Transfer into the country by immigrantsTransfers by nonresident individuals are unrestricted.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadLoan agreements exceeding one year require registration with the NBU.
Maintenance of accounts abroadYes.
Lending to nonresidents (financial or commercial credits)A license and written permission from the NBU are required.
Lending locally in foreign exchangeA license and written permission from the NBU are required.
Purchase of locally issued securities denominated in foreign exchangeYes.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsDifferent reserve requirements apply to deposits, depending on the type and currency of the funds.
Investment regulations
Abroad by banksAn NBU license is required.
In banks by nonresidentsYes.
Open foreign exchange position limitsOpen foreign exchange position limits are set in accordance with standards established by the NBU.
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investors
Limits (max.) on investment portfolio held abroadDiversified mutual funds are prohibited from (1) acquiring or investing additionally in shares and bonds of foreign issuers cleared for trading on organized stock exchanges of foreign countries in amounts exceeding 20% of the mutual fund’s total value; (2) acquiring or investing additionally in other assets, as allowed by legislation, in amounts exceeding 5% of the mutual fund’s assets; (3) acquiring or exchanging securities issued by persons, asset management companies, or depositories that are affiliated with the mutual fund; and (4) acquiring or investing additionally in securities with income guaranteed by foreign governments in amounts exceeding 20% of the total value of the mutual fund’s assets.
If a closed undiversified mutual fund makes an exclusively private placement of its own securities and more than 50% of its assets consist of corporate rights and securities not cleared for trading on the stock exchange or for the trading information system, it is treated as a venture fund. Only legal entities may be participants in a venture fund.
Limits (min.) on investment portfolio held locallyDiversified mutual funds are prohibited from (1) holding more than 30% of the total value of the mutual fund’s assets in monetary resources, bank accounts, savings certificates, and/or bonds issued by commercial banks; (2) acquiring or investing additionally in securities of one issuer in amounts exceeding 5% of the total value of the mutual fund’s assets; (3) acquiring or investing additionally in government securities with income guaranteed by the Cabinet of Ministers in amounts exceeding 25% of the total value of the mutual fund’s assets (investment of a mutual fund’s resources in fewer than three types of government securities is prohibited); (4) acquiring or investing additionally in securities of local governments in amounts exceeding 10% of the total value of assets; (5) acquiring or investing additionally in bonds of enterprises issued by residents (except commercial banks) in amounts exceeding 20% of the total value of the mutual fund’s assets; and (6) acquiring or investing additionally more than 40% of the total value of the mutual fund in shares of Ukrainian issuers.
If a closed undiversified mutual fund makes an exclusively private placement of its own securities, and more than 50% of its assets consist of corporate rights and securities not cleared for trading on the stock exchange or for the trading information system, it is treated as a venture fund. Only legal entities may be participants in a venture fund.
Assets of a mutual fund are managed by an asset management company (any legal entities created pursuant to Ukrainian legislation may be an asset management company). The total value of the assets of a mutual fund that are managed by a single asset management company may not exceed an amount set by the commission’s statutes and regulations.
Currency-matching regulations on assets/liabilities compositionAn NBU license is required for transferring own funds to nonresident accounts opened with foreign banks for the purpose of purchasing securities from the latter.
Other controls imposed by securities lawsAn NBU license is required for purchases by residents of foreign currency in the interbank foreign exchange market and for repurchase of Ukrainian securities from nonresidents.
Changes During 2004
Exchange arrangementJanuary 1. A 1.5% fee was imposed on purchases of noncash foreign currency; the proceeds were earmarked for government pension insurance.
October 15. Banks were prohibited from buying or selling foreign currency cash at a rate that deviated more than 2% from the NBU exchange rate. Foreign currency cash bought from the NBU could be resold to the NBU, within two months, at the original purchase price.
November 21. All banks licensed to engage in foreign exchange transactions were permitted to purchase foreign currency with hryvnias from the NBU to meet their own needs and those of their customers (rather than banks).
November 30. Certain temporary measures effective until December 31, 2004, were adopted. Asset transaction volumes (other than those involving government or NBU securities, or interbank transactions) could not exceed the level of November 30, 2004. Foreign exchange sales by banks could not exceed $1,000 for cash transactions, and $50,000 for noncash transactions, except with the written consent of the bank manager (or authorized agent). Time deposits (local and foreign currency) could not be withdrawn prior to maturity.
December 2. Banks were temporarily required to provide information before noon on requests accepted from customers for purchases of foreign exchange in amounts greater than $100,000 on the interbank market that day. Banks that did not provide such information risked not being allowed to make purchases in the market.
December 2. Banks were temporarily prohibited from supplying foreign exchange cash or traveler’s checks to foreign exchange bureaus opened by legal entities on the basis of agreements with banks.
December 11. Banks with the right to open correspondent accounts at foreign bank were not permitted to purchase foreign currency in the interbank currency market through other Ukrainian banks, but rather perform these transactions independently.
Arrangements for payments and receiptsMarch 1. Nonresident individuals were permitted to import domestic currency up to HRV 1,000 with a written customs declaration or proof that the currency was previously exported from Ukraine legally.
Payments for invisible transactions and current transfersNovember 13. Resident individuals were permitted to transfer the following amounts without opening a bank account: (1) equivalent of $1,000 (previously, $600) in favor of persons permanently or temporarily abroad; (2) $600 for purchases of foreign publications (previously, $500); and (3) $1,000 for other services provided by nonresidents (previously, $500).
Changes During 2005
Exchange arrangementFebruary 11. The requirements calling for banks to provide information about requests accepted from customers for the purchase of more than US$100,000 in foreign currency were lifted.
March 6. Banks were permitted to purchase or sell foreign exchange cash without fixed margin vis-à-vis the NBU rate.
Exports and export proceedsApril 1. The 50% surrender requirement on foreign exchange earnings by exporters was lifted.
Proceeds from invisible transactions and current transfersApril 1. The 50% surrender requirement on foreign exchange earnings by exporters was lifted.

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