Rebuilding Ukraine: National Bank eases process of attracting foreign investments for country’s reconstruction

The National Bank of Ukraine has recently revised the legal framework to facilitate foreign investors' direct access to reconstruction resources for Ukraine. 

The National Bank's press service reported that.

What is the problem?

As Ukraine's Prime Minister Denys Shmyhal noted, systemic financial support from partners is critically important so that Ukraine can continue to fight and direct internal resources to defense.

What is the solution?

In order to ensure direct access of foreign investors to the instruments of reconstruction of our country, the National Bank of Ukraine (NBU) has updated the legal framework.

How does it work?

Effective July 24, 2024, the NBU will be broadening its scope of clients and depositors who can be served while acting as a depository institution. Under the new regulations, the NBU will have the capability to open and manage the following accounts: 

• an account for a foreign financial institution holding securities in the name of a third party;
• an account for a foreign depository holding securities in the rightful owner's name.

As noted by the financial institution, these changes will create an infrastructure for the inflow of foreign investments into Ukraine.

"Opening an account in securities of a nominal holder for a foreign financial institution will connect the infrastructure of domestic and international financial markets, ensuring the access of foreign capital to Ukraine," the National Bank emphasized.

In addition, it will open the way for foreign investment in financial instruments issued for the reconstruction of the state, such as:

• local loan bonds,
• infrastructure bonds,
• bonds of international financial organizations,
• other debt financial instruments.

The changes will also allow for the implementation of the announced plans to expand the "link" with the international central depository Clearstream Banking Luxembourg.

These updates will help ensure the implementation of the Memorandum on Economic and Financial Policy with the IMF. The first stage of measures to improve the infrastructure of capital markets is currently being implemented.

For reference:

It should be noted that the Cabinet of Ministers [Ukraine's government – ed.] plans to hand over to the partners the developed list of public investment projects for 2025 in September.

"A meeting of the Strategic Investment Council under the Government of Ukraine was held. Several organizational issues were considered and the main initial parameters of work were determined[…] During September, we expect to approve the list of public investment projects for 2025 and hand it over to partners.

Thus, in conditions of limited financial resources, we will effectively allocate funds to get the best result for the state, communities, and all Ukrainians," Shmyhal wrote.

The Prime Minister also explained that the Strategic Investment Council was created to determine priorities and prepare a single portfolio of public investment projects. According to him, this is necessary for effective communication with partners who provide Ukraine with financial resources to implement these projects.

"It is about transparency, accountability, and mutual trust between Ukraine and donors. It is also one of the stages through which all candidate states for joining the European Union go," he said.

It is worth adding that the European Union and partner European banks are creating a €1.4 billion financial program to attract foreign capital investments to Ukraine.