While the ongoing full-scale war is the primary cause for the drop in foreign investment Ukraine has experienced, there are additional barriers at play, according to Oleksandr Vodoviz, a senior executive at Metinvest Group.
“Before the war, large corporations secured loans amounting to hundreds of millions or even billions of dollars. Now, we are limited to seeking financing in the range of €5-10M,” he noted.
A major obstacle to investment in Ukraine is the NBU’s limitations on dividend distributions and currency transactions. Though a €1M monthly cap may seem reasonable for small and medium enterprises, it is too restrictive for larger companies with loan portfolios of $2.5B or more.
Last year, Ukraine attracted $3.3B in direct foreign investment, with $2.8B being reinvestment and only $500-600M classified as “pure” investment. In contrast, this figure stood at $7.8B in 2021.
In light of this situation, Danylo Hetmantsev, head of the parliamentary tax committee, urged the NBU to gradually adjust currency restrictions to better align with business requirements.