KIEV Dec 14 Ukraine's central bank extended on
Wednesday currency controls including the mandatory sale of 65
percent of foreign currency revenue by exporters, citing
increased political instability and delayed loans from the
International Monetary Fund.
The controls were introduced in 2014 to support the hryvnia
currency, which had halved in value in the wake of political
upheaval and the outbreak of separatist fighting. The bank eased
some restrictions in June, but the majority remain in force as
of the latest review.
"Uncertainty has risen due to increased political tension.
Secondly, the likelihood has grown of delays to receiving
official financing due to the slow implementation of measures
under the Ukraine's IMF programme," the bank said in a
statement, explaining its decision to extend controls.
Squabbles in parliament have delayed the approval of a
budget for 2017. This has held up the disbursement of a further
$1.3 billion from the Fund, causing foreign reserves to fall
below the central bank's target for the end of the year.
The central bank said there were also short-term systemic
risks to financial stability due to the possibility that
individual banks might fail a recapitalisation programme.
Reforming the banking sector, including by recapitalising
lenders and reducing their loans to shareholders, was one of the
tasks mandated by the $17.5 billion IMF programme.
Privatbank, Ukraine's largest lender, has been in particular
focus, because with $6 billion in private deposits - 36.5
percent of Ukraine's total - it is considered too big to fail.
The central bank said it would review its restriction on the
mandatory sale of foreign income within six months, but did not
say when other controls would be reviewed.
The other restrictions include limits on currency
withdrawals and purchases and curbs on the repatriation of
(Reporting by Natalia Zinets; Writing by Alessanda Prentice;
Editing by Hugh Lawson)