Foreign lenders get more possibilities to fund projects in Ukraine

Friday, April 8, 2016 - 12:33 (EEST) Section: Latest news

The National Bank of Ukraine (NBU) has allowed international financial institutions to use hryvnia funds received as a loan from an authorized bank to provide lending to Ukrainian businesses, according to a posting published on the regulator`s website.
The decision was made following an appeal by the International Finance Corporation (IFC) and is stipulated in NBU Board resolution No. 225.
Earlier, international financial organizations were able to provide loans only by means of hryvnia funds received from the sale of foreign currency on Ukraine`s interbank currency market and placement of own bonds in the territory of country.
”These changes will apply to the International Finance Corporation and the Nordic Environment Finance Corporation,” the regulator`s statement reads.
International financial institutions can also use their current accounts to handle settlements under foreign investment transactions in Ukraine, insurance contracts, payments for goods, services and work.
”The NBU decision will enable the international financial institutions to boost their lending in the local currency to domestic enterprises, thus, making it easier for Ukrainian companies to get loans in the national currency,” NBU Deputy Governor Oleh Churiy was quoted as saying.
It is noted that the IFC, in turn, expects to be able to improve access of a wider range of Ukrainian companies to financing, as well as to extend the terms of the financing.
As UaPosition reported earlier, the NBU says that the Ukrainian banking system has excess liquidity. As of January 1, 2016, the amount of banks` investment in NBU certificates of deposit reached UAH 89.265 billion.
Banks are reluctant to resume lending because of a low level of the creditors` rights protection, the accumulation of bad debts and borrowers` low creditworthiness.
Remaining debt under hryvnia-denominated loans decreased in 2015 by 19.1% to UAH 439.3 billion, under foreign currency loans – by 20.3% to $23.9 billion.