By Olena Harmash
KYIV (Reuters) – Ukraine’s central bank is preparing to further ease some of its wartime capital controls, it said on Thursday, as it looks for ways to support exporters in generating economic growth.
Kyiv imposed tight capital controls and restrictions on the foreign exchange market to prevent capital flight and maintain macroeconomic stability since Russia’s invasion in February 2022 shattered the economy. But it has since eased some of these, notably with a package of measures last May.
The central bank told Reuters in written comments that it planned “targeted solutions” in the near term to simplify restrictions on businesses, to promote Ukrainian goods abroad and to defend Ukrainian businesses in foreign courts.
“The central bank remains committed to easing currency restrictions,” it said. “Its goal is to incorporate incentives for new capital inflows into currency liberalisation measures.”
Ukraine’s gross domestic product plunged by nearly a third in 2022 after Moscow’s invasion, and has not recovered to pre-war levels. Russia controls around a fifth of Ukraine’s territory.
The resilience of Ukrainian businesses and the steady flow of foreign financial aid have been crucial in helping the economy adapt to the huge economic headwinds, allowing the central bank to start easing capital controls.
The central bank said in its comments that more than 800 companies had already benefited. The changes have enabled 500 companies to repatriate some dividends and 300 other firms to pay interest on some of their foreign loans, it said.
“This has improved the working environment for a significant part of Ukrainian businesses and at the same time it had no decisive impact on the foreign exchange market,” the central bank said.
The central bank’s foreign currency reserves stood at about $40.1 billion at the start of March, the most recent data showed.
Finance Ministry data showed that the government has received more than $118 billion in foreign aid since the 2022 invasion.
(Reporting by Olena Harmash; editing by Tom Balmforth and Kevin Liffey)
