Ukraine’s central bank is considering allowing foreign shareholders to repatriate 2023 dividends as part of measures to lure investment to the war-battered economy.
(Bloomberg) — Ukraine’s central bank is considering allowing foreign shareholders to repatriate 2023 dividends as part of measures to lure investment to the war-battered economy.
The repatriation plan may be one of the first measures the National Bank of Ukraine will enact as it edges toward easing capital controls and returning to policies that existed before Russia’s February, 2022 invasion, Deputy Governors Yuriy Heletiy and Sergiy Nikolaychuk said in a joint interview.
“The issue is on our agenda,” Heletiy said on Wednesday.
The central bank published a strategy to ease capital controls this month that envisions three main avenues of action. They are to relax foreign-currency restrictions, shift to a more flexible hryvnia exchange rate and return to an inflation-targeting monetary policy.
Read More: Ukraine Inches Toward Lifting Wartime Foreign Currency Curbs
Early steps toward relaxing restrictions may also include expanding the amount of foreign currency private individuals can buy with hryvnia, a practice many people use to shield savings from inflation and uncertainty, Heletiy and Nikolaychuk said. However businesses — and not households — will remain the initial focus of easing capital controls.
“The government and business are to some extent priorities over households, if we are talking about our following the roadmap of FX liberalization, but at the same time we are taking into account the consequences of various steps,” Nikolaychuk said. “We believe that if we can create normal conditions for business to restore investment and borrowing capacities, companies will be able to raise funds and revive their activity, and there is no doubt it will benefit people as well.”
The plan to shift to a more flexible exchange rate will happen by allowing “very limited” fluctuations in the hryvnia, with the central bank continuing to steer the currency via market interventions when needed, according to Heletiy.
“While shifting to more flexible exchange rate, we will continue to sell a big amount of foreign currency on the market, but we will respond to changes in market forces,” Nikolaychuk said. “If there is a bigger demand for foreign currency, it will lead to small depreciation, and, vice versa. If we see lower demand compared with our estimates on some days or weeks, it will be a signal for us to strengthen hryvnia a bit.”
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