The Index for Monitoring Reforms (iMoRe) is +0.2 points for the period from April 6 to April 19, 2020, out of possible range from -5.0 to +5.0. The index for the previous round was +0.2 points as well.
Chart 1. iMoRe Dynamics
Chart 2. іMoRe and its components in the current round
New criteria and requirements for writing off bad financial assets
Two resolutions of the National Bank of Ukraine regulating the write-off of “bad” assets were included in this issue of iMoRe. Resolution №52 obliges banks to develop internal bank documents for writing off impaired financial assets (debt write-off provisions). Such documents should contain criteria that allow the bank to determine the financial asset cannot be recovered. Resolution №49 allows banks to write off non-performing loans from reserves for expected losses provided they meet the following key criteria:
- debt repayment is overdue for more than 3 years;
- for the previous 3 years the bank did not receive significant payments on this loan (more than 10% of the carrying amount of such an asset);
- the bank failed to sell this asset three times or did not receive significant proceeds from the sale of collateral.
Important to note: the write-off does not equal debt forgiveness and the bank may continue to demand debt repayment.
Chart 3. Value of іMoRe components and number of events
Note: Index for Monitoring Reforms (iMoRe) from VoxUkraine aims to provide a comprehensive assessment of reform efforts by Ukraine’s authorities. The Index is based on expert assessments of changes in the regulatory environment in five areas:
- Public Finance
- Monetary system
- Business Environment
For details please visit imorevox.org.
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