Main Changes in Ukraine due to Covid-19 Pandemic

Coronavirus disease 2019 has a huge impact on Ukraine as well. Despite that there are less than 1400 confirmed cases of coronavirus in Ukraine (as of April 07 2020), Government of Ukraine reacted very resolutely. We want you to be informed about current situation in Ukraine. From the very beginning of this difficult period we have been and we will be supporting many individuals and companies to pass it in the best way. Here are the main changes that might affect foreign citizens that have business interests in Ukraine.

Cross-border changes

Ukraine bans all foreign visitors. Foreign citizens are not able to enter the territory of Ukraine from March 17, 2020 till April 24, 2020. There is a high risk that this period will be extended. Even if a traveler has a valid visa in his passport or a residence permit or if there are any company or assets in Ukraine still such citizen is not allowed to enter Ukraine. Moreover, even the airline has no right to give a boarding ticket for such a passenger. It is not unusual decision for such a difficult period. Many countries have changed their border rules due to covid-19 spread worldwide. If you are going to travel to Ukraine during covid-19 pandemic you should check the restrictions the day before you travel. The most truthful information is published on IATA website.
Since March 23 2020 all of Ukrainian international airports (except Boryspil International Airport, KBP) had been closed till a special decision of Ukraine Government. KBP is the only Airport that is operating international flights. Also, some special travelers are allowed to enter Ukraine based on a special permit, which is issued by Ministry of Foreign affairs of Ukraine. But this is the case when the arrival of such person is needed for the Government.
Of course, Ukrainian citizens are able to enter the territory of Ukraine but will have to stay in quarantine for 14 days. Many countries have a quarantine rules for individuals arriving from abroad and Ukraine is not an exception.
Most probably when the ban for Ukraine entry will be removed still the 14 days quarantine rule will remain till the situation in the world get better. But nobody can tell for sure when Ukraine’s reopening is expected as it depend on covid pandemic.

Ukraine financial and banking system during covid-19 pandemic

No changes at all as of April 2020. Banks are opened and it is possible to visit branches, with some minimal safety restrictions.
This is the third big crisis for Ukraine since 2008. So both National Bank of Ukraine and the Ministry of Finance of Ukraine know how to react properly. There are no restrictions for financial transactions, purchase and sell of treasuries, currency exchange and deposit account transactions. I would say that that Ukrainian financial and banking system works the same as before the beginning of this pandemic. Many financial experts say our Ukrainian banks have no urgent need of liquidity. Most of our banks had been declaring record profits in 2018 and 2019 years. Although there is a strong intention to receive a loan from International monetary fund. IMF was calling to approve needed changes in legislation for this, including adoption of land market law. Ukraine expect to receive 3-10 billion USD Extended Fund Facility bailout from IMF in April-May 2020. It shall affect investment environment and financial stability very positively.

Economy of Ukraine during crisis caused by coronavirus disease spread

There is no doubt that our economy will go into recession due to coronavirus outbreak across the world. But most of economists are sure that we will shall not be affected as much as most of the countries. The economy of Ukraine is based mainly on agriculture, IT services and food production. Even when people have to stay at home still they consume food and use internet for different purposes. Since 23-rd January 2020 the price for crude oil has decreased for 50%. At the same time price for main agriculture commodities has decreased only for 15-20%. So despite all the terrible thing happening worldwide, despite coming crisis and recession Ukraine has all the chances to be more stable than other countries. The other fact is that households mostly try not to spend much funds for electronics, cars and other stuff during this crisis. Unfortunately there are not so many factories and plants in our country producing mentioned goods. That is one more reason to think that less people in Ukraine will loose their jobs.
Good thing is that many Ukrainian citizens that were working in other countries (mainly Poland, Germany and Italy) are moving back to Ukraine. It may seem that it shall create some social instability. But it shall not be so and let me explain you why. Many Ukrainians moved to work abroad after the beginning of Russian aggression in 2014. It was a huge labor migration from Ukraine. There is no exact statistics but approximately 2 million of our citizens have moved to work outside. Since 2017 there has been a growing demand for a cheap labor in our country. And there was a big growth of wages in Ukraine. Many companies were not able to keep increasing the wages. Many businessman before starting a new manufacturing were really concern about the labor. Now things are changing and there will be more affordable and qualified workers in Ukraine. The other benefit is that such people come back with some experience, financial and intellectual capital. There is the information that right after coming back they buy real estate and they also ready to open business in Ukraine. By the mid of april at least 250 000 Ukrainian people shall come back home. And we are sure that it will affect very positively our economy in the short and medium terms.
The other good thing is that finally our currency is devaluating. Unreasonably high cost of UAH has been the main problem for economy of Ukraine since May 2019. That was due to successful issuing of Ukrainian Eurobonds for significant amount. Most probably It was not wise political decision of our new and unexperienced Government and President. As our economy depends on export, our government shouldn’t have keep Ukrainian hryvnia at the rate 24-25 per USD for all this time. And only in few weeks our currency has devaluated till 27 UAH per USD. Already it affects positively the prices of our products which are being exported. It is expected that our currency shall decrease till 30 per one US dollar. This will be factor that will increase our export significantly. Moreover lowering of our currency versus USD and EURO will make domestic goods more competitive to imported. Despite the fact that economy of Ukraine hugely depends on export still in 2019 balance of trade deficit in Ukraine was negative for more than 14 billion US dollars. Total cost of exported goods was 46113 USD and Total cost of imported goods was 60445. Now there are much more grounds to have less negative or even positive data in 2020.
Bad thing is than many social programs and governmental procurements most probably will be cut. At the same time our Government is not going to stop medium and big infrastructure constructions. Also there is a chance that during this not easy period our Government will make needed reforms more resolutely.

Main restrictions for businesses in Ukraine during covid-19 pandemic

All the entertainment places like cinemas, disco, bars, restaurants, shopping malls, beaches, parks cafes are closed. Non-food shops are closed as well, except pharmacies, home improvement and supermarkets. Regarding restaurant business only food delivery is allowed. So food delivery companies has a lot of work to do during this crisis.
This pandemic has affected transport services in Ukraine hugely. All domestic and international passenger flights are forbidden. Kyiv metro has been closed on March 17-th 2020. Intercity trains and buses are not running as well. But there are no limitations or constraints for cargo transportation of any kind.
Despite all the limitations, property development companies and manufacturers are working normally. It is also possible developer’s offices and buy apartments. So there had been no restrictions for construction process as well as producing of construction materials.
Notaries are working as well with no changes. So any procedure that has to be done at the Ukraine notary office can be done. Some of our clients are using this period to buy assets at cheaper cost. In Ukraine there are no such restrictions as in many European countries and Ukraine is not shall not be affected as much as Italy or Spain (we do not depend so much on tourism). Still many people prefer to go in cash and offer good discount for property. At the same time there is no freefall of prices and it is not expected.

We hope that this information is useful for you.

Stay home, be safe!

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