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Ukraine central bank introduces largest wartime currency liberalisation measures

FILE PHOTO: U.S. dollar and Ukrainian hryvnia banknotes are seen in this picture illustration taken in Kiev

(Reuters) -Ukraine's central bank introduced its largest wartime currency liberalization measures on Friday aimed at easing restrictions for businesses, more than two years after Russia's invasion prompted the imposition of tough restrictions.

Most of the new provisions take effect on May 4.

A package of liberalisation measures had been expected for some time to support business and soften restrictions on capital outflows and tight foreign exchange controls imposed after the February 2022 invasion.

The Ukrainian economy shrank by about a third in the first year of the war.

Under the new regulations, posted on social media, currency restrictions are to be lifted on imports of goods and services, restrictions on repayments of newly contracted external loans are eased, and restrictions on transferring foreign currency from representative offices to parent companies are eased.


The provisions also allow for business to repatriate "new" dividends, a measure to take effect on May 13.

A central bank statement said the measures were taken with due consideration for the necessary prerequisites.

"Careful analysis confirms that the changes should not create additional risks for macro-financial stability and stability of the foreign exchange market," it said.

The changes, it said, had already been taken into account in updated macroeconomic forecasts, including maintaining international reserves close to the current level of $43 billion to $44 billion.

Central bank governor Andriy Pyshnyi, writing on Facebook, described the moves as a "very tangible step" that would provide business with "opportunities to enter new markets or bring in investments".

"This step, along with other measures...should allow Ukrainian business to 'breathe to its full potential' and promote the involvement of private capital in the recovery of the economy," he wrote.

Ukraine's economy, bolstered by financial aid from its Western partners, posted 5.3% growth last year and is forecast to expand by 3% this year.

(Reporting by Ron Popeski; Editing by Jonathan Oatis and Deepa Babington)