Ukraine's National Bank Prohibits Currency Purchase for the Loans Early Repayment

Under Resolution No.49 of the National Bank of Ukraine, dated 6 February 2014 (the "Financial Crisis Resolution"), which came into effect on 7 February 2014, Ukrainian residents shall not be allowed to purchase foreign currency in order to prematurely fulfill their obligations under the loan agreements with foreign lenders (the "Currency Purchase Prohibition"). Although there is no express indication in the Financial Crisis Resolution, it seems that the Currency Purchase Prohibition shall apply to the loan agreements executed both prior to and after the effective date of the Financial Crisis Resolution. The Financial Crisis Resolution shall be in force until cancelled by a separate resolution of the National Bank of Ukraine to that effect. Given that the Financial Crisis Resolution has only been in force since 7 February 2014, there are no formal clarifications regarding the application of the Currency Purchase Prohibition, i.e. whether the Currency Purchase Prohibition applies only to voluntary early repayment or whether it may also apply to any acceleration of the loan repayment. Furthermore, it is unclear whether the Currency Purchase Prohibition would apply to the payments made by the execution service on the basis of a court decision upholding creditor's claims under a loan agreement. Therefore, it may be advisable to apply to the National Bank of Ukraine for the respective clarification.

Notably, the Financial Crisis Resolution does not prohibit early repayments of the borrowers with their own funds in foreign currency.

Historically early repayment in general was prohibited by the Law of Ukraine on Amendment of Certain Laws of Ukraine with the Purpose of Overcoming Adverse Consequences of the Financial Crisis, dated 23 June 2009. However, later it was amended to cancel the early repayment prohibition in full.

For further information please contact Asters'
partner Iryna Pokanay and associate Yulia Spolitak.

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