The dead weight of the Kremlin's currency should become an investment in Ukrainian victory
Musa Magomedov, member of the Parliament of Ukraine, member of the Verkhovna Rada Committee on Economic Development
In the midst of a full-scale war, Russian and Belarusian rubles remain ballast for Ukrainian companies. Although this currency must work for the Armed Forces of Ukraine.
According to the National Bank of Ukraine, the amount of rubles on the accounts of Ukrainian legal entities equals about 57 million dollars. This is the money of Ukrainians, Ukrainian business, and industry, which has been legally earned, but is currently blocked. NBU Resolution No. 18 of February 24, 2022 prohibits Ukrainian institutions from conducting any currency transactions using Russian and Belarusian rubles.
At the onset of full-scale war, this Resolution introduced a number of much-needed restrictions. For example, the fixed official exchange rate (as of February 24), the ban on issuing funds in foreign currency. Ukraine faced such large-scale currency restrictions for the first time. And, of course, it took time to adjust and create a single working banking mechanism under these conditions.
As for individuals, the problem was solved much faster. On February 25, 2022, the National Bank revoked the banking license and liquidated the Ukrainian branches of two Russian banks. These are Prominvestbank and the International Reserve Bank. The salary cards of a large number of people turned out to be blocked. Three weeks later - on March 17 - the Individual Deposit Guarantee Fund approved the register of compensations, first to depositors of Prominvestbank, and from March 25 - to the International Reserve Bank. The total amount of compensation in the first case was almost 3.4 million hryvnias, and in the second - about 1.2 billion hryvnias. Payments began the same month.
However, the accounts of legal entities continued to be blocked.
I fully support the complete ban on the sale of currencies of the aggressor countries on the currency market of Ukraine, as well as any economic activity with them. However, there is a flip side to this ban. As a result of the Resolution, number of enterprises are unable to dispose the funds placed in ruble accounts. The ban on transactions with rubles was introduced without a transition period, without a proper mechanism for its implementation, without ways to exchange existing Russian rubles for another currency. And it caused negative consequences for the economy of Ukraine, which is already in a critical situation without it.
According to the information of the Ukrainian Institute of the Future, which became public at the beginning of July this year, the forecast of the economy of our country for 2023-2024 is rather negative. The fact is that during this period of time the working population will decrease by several million. We will experience a projected shortfall in investment and crisis in business development. So, we need these blocked funds now more than ever. And we should have developed a mechanism for their removal a long time ago.
This issue can be resolved by making certain changes to the NBU's resolution regarding the possibility of a one-time exchange transaction of rubles accumulated in the accounts of enterprises before the war.
Verkhovna Rada’s Committee on Economic Development has prepared an appeal to the National Bank of Ukraine regarding this issue. We claim that the balances of Russian and Belarusian rubles on the accounts of Ukrainian legal entities require a practical solution as soon as possible. After all, convertible rubles should work. And they should work for Ukraine.
For example, for the blocked 57 million dollars, we can buy 22,800 Mavic 3e drones, which are indispensable on the front. Or more than 2,700 Valkyrie unmanned aerial systems. Or, after all, almost 3 million 170 thousand such necessary, high-quality and life-saving Dnipro turnstiles. So let's take care of our own. These funds can and should be used exclusively to help the security and defense forces and purchase military bonds, which are a direct investment in our Victory.