Currency liberalization in Ukraine: what to expect and when?
The new bill, which greatly simplifies foreign exchange operations, has already received approval from both government officials and businessmen. Experts believe that current rules are obsolete, reports “Investor”.
The bill has already become one of the largest topics of discussion in the field of the Ukrainian economy. Starting with a signature of the bill by the president and its transfer to the Verkhovna Rada during a meeting with Ukrainian and foreign businessmen and continuing emotional headlines in domestic media.
“It allows everything that is not directly forbidden. It changes the logic of processes,”
The President is supported by the National Bank. An adoption of this bill will open a way to a new, liberal and transparent model of currency regulation. The procedures for working with currency will now be used to collect statistical data. Currency restrictions will only be introduced for a short period of time to overcome or prevent crises.
The phenomenon of this bill is its broad consolidated support. It was supported by the National Council of Reforms, and Ukrainian Prime Minister Volodymyr Groisman stated that he hopes the Verkhovna Rada will approve the bill as soon as possible.
Nowadays, a foreign exchange market is controlled by a government decree from 1993, which is outdated and extremely ineffective. Experts believe that its adoption was directed at controlling a mass leakage of capital.
The Center for Economic Strategies named several positive aspects of the new bill. Removing foreign trade barriers against the background of the Free Trade Agreement with the EU could increase the attractiveness of Ukraine for investment.
“It is a classic scheme of how the countries of Eastern Europe provided their economic growth,”
said Chief Executive Officer of the Kyiv Center for Economic Strategy Gleb Vyshlinsky.
These innovations will be particularly important to Ukrainian businessmen, those who sell their goods for export or create products with high added value. According to the previous requirements, entrepreneurs who sell goods abroad, or buy goods there, showed the bank a contract and sold foreign currency earnings, at 50% level.
However, a delay in the introduction of new norms is possible as liberalization depends on the adoption of a package of laws on BEPS. We’re talking about a so-called Base Erosion and Profit Shifting, a project of the Organization for Economic Cooperation and Development (OECD) created in order to oppose a disappearance of a tax base and profit-sharing. The current wording of the bill does not allow to mitigate liberalization measures until this package is adopted.
The success and consolidation of the adoption of the new law are largely due to the fact that the document almost does not contain norms that would damage interests of influential groups of the government. It can be expected that due to reforms, the NBU will be able to create a bill that does not contain corruption risks and meets the expectations of the business.