On 5 November 2008, new legislation came into force to protect the constitutional rights of Ukraine's citizens, safeguard its economy and minimise the impact on it of the global financial crisis.
The key changes are:
- to establish a stabilisation fund which must be used for:
-providing credit and/or re-financing for banks or companies who borrowed from foreign creditors before 15 September 2008
- providing credit or re-financing for long-term infrastructure, investment and innovation projects
- reducing the cost of future loans for small or medium businesses, and
- increasing domestic demand for goods produced in Ukraine
- to entitle the Ministry of Finance to acquire shares in banks
- to apply a special accelerated procedure for capitalising banks
- to impose a moratorium on banks making distributions of net income in any year when they:
- have balance sheet losses at the end of three current months; and/or
- have balance sheet losses exceeding 30% of their charter capital during any calendar month; and/or
- have outstanding liabilities exceeding 20% of their total liabilities
To facilitate these changes, the legislation also introduces amendments to the Budgetary Code, the Economic Code and other legislation affecting issues such as the 2008 state budget, the banking system, the National Bank of Ukraine and VAT.
On 7 November 2008, a Presidential Decree also came into force containing measures to strengthen fiscal and budgetary discipline and secure the Ukrainian economy. It authorised the Cabinet of Ministers, the National Bank of Ukraine and other state authorities to work together to:
- consult with international finance organisations, the European Commission and foreign governments about giving financial support to infrastructure projects
- increase state expenditure on infrastructure projects
- obtain a loan from the IMF
- make VAT refunds within one month and simplify the VAT refund procedure
- bring about the end of the moratorium on selling agricultural land
- re-finance banks whose solvency worsens and
- re-finance investment projects, especially infrastructure projects
Law: Law of Ukraine “On Urgent Measures for Avoidance of World Financial Crisis’ Negative Impact on Economy of Ukraine and Amending of Some Legislative Acts of Ukraine” dated 31 October 2008.
Law: Decree of the President of Ukraine “On Decision of the National Security and Defence Council dated 20 October 2008 “On Bailout Measures to Intensify Financial and Budgetary Discipline and Minimisation of World Financial Crisis’ Negative Impact on Economy of Ukraine” dated 24 October 2008
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