The Cabinet of Ministers of Ukraine has adopted a resolution on improving financial support for Ukrainian businesses. The changes are aimed at increasing the efficiency of state guarantees, which are provided on a portfolio basis.
The term of state guarantees will be extended up to ten years for loans that are raised for the purpose of rebuilding fixed assets destroyed partially or completely as a result of military aggression, and up to five years for all other categories of loans, which in turn extends the term of contracts for agricultural manufacturers under previously provided guarantees.
Also, from the moment of adoption of the act , it is possible to obtain loans under state guarantees by business entities operating in the processing industry (main KVED) under all KVEDs of Section C of the National Classifier of Ukraine.
The innovations will allow supporting micro, small and/or medium-sized business entities - residents of Ukraine in the difficult conditions of martial law and will have a positive impact both on the implementation of long-term investment projects and on meeting working capital needs. This will help stabilize the economic situation and support national production on the way to sustainable recovery.
The National Bank of Ukraine by Resolution No. 52 of May 2, 2024 within the framework of the implementation of the European integration course of Ukraine, approved changes to a number of normative legal acts to ensure their compliance with the requirements of the European Union legislation regarding the definition of non-performing assets.
For this purpose, the term "non-performing assets" was introduced in the Regulation on the organization of the process of managing problem assets in banks of Ukraine. The components of such assets are defined in accordance with the provisions of Article 47a "Non-operating exposure" of Regulation of the European Parliament and Council (EU) No. 575/2013 of June 26, 2013 (hereinafter - EU Regulation No. 575/2013).
In the future, the non-performing assets of the bank, except for those for which a sign of default has been established in accordance with the prudential requirements of the Regulation on determining the amount of credit risk by banks of Ukraine for active banking operations, will include:
- purchased or created depreciated financial assets;
- restructured assets for which, after the termination of their recognition as non-performing, the bank restructured and/or for which there is a debt repayment delay of more than 30 calendar days.
Accordingly, in the Regulation on determination of the amount of credit risk by banks of Ukraine for active banking operations, the term "non-performing assets" was replaced by the term "defaulted assets" to ensure compliance with the definition of default with the provisions of Article 178 "Default of an obligator" of EU Regulation No. 575/2013.
The changes also define the conditions for ending recognition of non-performing and defaulted assets. Particular attention is paid to restructured assets, taking into account the increased risks of such assets and the approach in European legislation. In accordance with the changes, in particular, the following conditions must be met in order to terminate recognition of a restructured asset as non-performing:
- at least 365 calendar days have passed since the date of debt restructuring;
- none of the debtor's obligations is overdue for more than 30 calendar days;
- the bank formed a judgment on the debtor's ability to fulfill obligations, which was confirmed by payment of the amount of the debt that was overdue or written off by the bank in accordance with the terms of debt restructuring.
The changes will enter into force on January 1, 2025, therefore, banks have been given enough time to prepare internal bank documents in order to ensure their practical implementation.
It is expected that such changes will strengthen the non-performing asset management system in banks, contribute to increasing its efficiency and attention to the process of settlement of such assets. First of all, this will have a positive effect on the further reduction of the volume of non-performing loans in banks and the availability of bank lending. In addition, the introduced changes will bring the statistics of non-performing loans in line with European approaches, which increases the transparency of the domestic financial sector.
Also, the specified changes will become the basis for the development of the Strategy for the settlement of non-performing loans in Ukraine, which will contribute to increasing the investment attractiveness of the banking sector.
Changes have also been made to the Instructions on the procedure for regulating the activities of banks in Ukraine , the Regulation on the organization of the risk management system in Ukrainian banks and banking groups, and the Rules for the operation of banks in connection with the introduction of martial law in Ukraine.
The Cabinet of Ministers of Ukraine has made changes to the Procedure for providing financial state support to business entities, which defines the parameters of the "Affordable loans 5-7-9%" program. In particular, the maximum amount of credit for working capital financing was reduced to UAH 5 million. Limits for investment purposes remain unchanged, in particular for enterprises of the processing industry they amount to UAH 150 million. The corresponding decision was approved at the meeting of the Government on April 30, 2024.
In addition, the Government has changed the credit limit for the livestock industry - increasing it to UAH 150 million.
At the same time, the parameters of the program, which affect the profit of banks, have been changed. The size of the margin of banks working with borrowers under the "Affordable Loans 5-7-9% " program was limited. This will make it possible to release UAH 3 billion and direct these funds directly to lending to businesses.
In the conditions of full-scale Russian armed aggression against Ukraine, destruction and decrease in economic activity, the state program "Affordable loans 5-7-9%" was actually the only effective tool for financial support of small and medium-sized enterprises. Last year, 90% of new business loans in the country were issued under the "5-7-9%" program. However, the share of loans for investment purposes under the program was only about 12%.
The Cabinet of Ministers of Ukraine has approved changes to the Procedure for using the funds provided for in the state budget for providing support to farms, approved by Resolution of the Cabinet of Ministers of Ukraine No. 1102 of August 25, 2004.
Some farms, located in the front-line territories or TOT, received loans through Ukrainian State Fund For Farmers Support until 2022. However, as of today, some of them are unable to fully fulfill their obligations regarding the return of budget funds.
The changes provide for the possibility of delaying the repayment of loans until December 31, 2025.
These are farms that, as of February 24, 2022, were located in the territories included in the list of territories where hostilities are (were) taking place, in particular, where state electronic information resources function, or temporarily occupied by the Russian Federation (the list was approved by the order of the Ministry of Reintegration).
In addition, applications from farmers for financial support will now be accepted online through the State Agrarian Register .
Such changes will make it possible to form a long-term state policy to support farmers, create equal conditions for all farms to participate in state support programs.
The corresponding project the act was developed by the Ministry of Agrarian Policy with the support of the Ministry of Reintegration. In particular, this issue was previously discussed at the meetings of the Coordination Staff on issues of de-occupied territories.
The Cabinet of Ministers of Ukraine has adopted Resolution No. 466 of April 26, 2024 "On Approval of the Procedure for maintaining the Unified State Register of quipment for the Preparation or Processing of Tobacco, Tobacco Raw Materials, and Industrial Production of Tobacco Products".
This was necessary to prevent the illegal manufacture of excise goods and to fulfill Ukraine's obligations in the field of European integration.
The implementation of the resolution will make it possible to bring the normative legal acts of the Government into compliance with the requirements of Law of Ukraine No. 481/95-BP of December 19, 1995 "On State Regulation of Production and Circulation of Ethyl Alcohol, Alcohol Distillates, Alcoholic Beverages, Tobacco Products, Liquids Used in Electronic Cigarettes, and Fuel" taking into account the changes made by the Law of Ukraine No. 3173-IX of June 29, 2023 "On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine in Connection with the Introduction of Electronic Traceability of the Circulation of Alcoholic Beverages, Tobacco Products and of Liquids Used in Electronic Cigarettes", which entered into force on January 22, 2024, in terms of clarifying the list of equipment for the industrial production of tobacco products, which must be entered in the Unified State Register. This is necessary to increase consumer safety by strengthening control over the production of tobacco products.
The adoption of the Resolution will contribute to the reduction of illegal production and circulation of tobacco raw materials and tobacco products, which will ensure the receipt of taxes to the budget in full.
This is important for maintaining the security of the country, because most of the revenues are directed to the security and defense sector.
National Bank of Ukraine by Resolution No. 48 of April 25, 2024 "On Amendments to Certain Regulatory Acts of the National Bank of Ukraine" revised the list of services and tariffs for them, in particular for cash service services with the aim of improving the quality of cash in circulation and ensuring its variability during cash calculations
Therefore, for banks, collection companies and cash processing companies, the regulator established the following differentiated tariffs for services:
1) from issuing hryvnia cash:
- 0.20% of the amount of issued cash – on exchange, circulation coins, banknotes of lower denominations of 20, 50, 100, 200 hryvnias (previously the rate was 0.40%);
- 0.40% of the amount of cash issued – banknotes of higher denominations of 500 and 1,000 hryvnias (remained unchanged);
2) from the delivery of negotiable exchangeable and circulating coins and negotiable banknotes of 2014 and subsequent years of issue:
- 0.15% of the amount of cash handed over - on change, circulating coins, banknotes of lower denominations of 20, 50, 100 and 200 hryvnias (previously the tariff was at the level of 0.25%);
- 0.10% of the amount of cash handed over - for banknotes of higher denominations of 500 and 1000 hryvnias (previously, the rate was 0.25%);
3) for handing in banknotes of 2003-2007 in denominations of 50, 200 and 500 hryvnias (including unsorted ones) - zero (free) tariff (previously the tariff was 0.25%).
Changes to the list of services and tariffs for cash service will take effect on July 1, 2024, accordingly, new tariffs will apply from that day.
In addition, the National Bank reviewed the current and introduced new tariffs for registration and licensing services of non-banking institutions in order to implement the norms of the Laws of Ukraine "On Financial Services and Financial Companies", "On Insurance", "On Credit Unions", etc. They are effective from May 1, 2024.
