Foreign currency account and receiving a grant in foreign currency

Donors from the EU, the United States or UN agencies usually pay in their own currency, and the money arrives by SWIFT transfer. The recipient needs a current account in foreign currency with a Ukrainian bank. A legal entity, a civic or charitable organisation and a sole proprietor can all open one. Budgetary institutions follow a separate procedure: they work through the State Treasury or state-owned banks, as described in the article on treasury servicing.

What to give the donor and what the bank will ask

The donor needs the account holder’s name in Latin script exactly as the bank has it, the account number in IBAN format, the bank’s SWIFT code and, for dollar payments, often the correspondent bank details. The bank issues these details as a statement, and that statement is what should be forwarded rather than a hand-typed version.

When the funds arrive, the bank, as an entity subject to financial monitoring rules, may ask you to explain where the money comes from. Keep the grant agreement with a translation, the award letter, the project budget and the statutory documents at hand. If the payer’s name in the transfer does not match the donor’s name in the agreement, for instance when the donor’s treasury or a programme administrator pays, ask the donor for a letter explaining this.

Does the currency have to be sold

The current wording of Resolution No. 18 of the Board of the National Bank of Ukraine of 24 February 2022, which governs banking during martial law, contains no requirement to sell foreign currency receipts. The grant can be held on the account in foreign currency and sold in parts when hryvnia is needed for salaries and payments to Ukrainian suppliers.

The restrictions concern the reverse flow. Paragraph 14 of the Resolution prohibits cross-border transfers from Ukraine apart from a list of exceptions. These include settlements within international technical assistance and cross-border cooperation projects and programmes, and the return of grant funds to grantors, of which the Resolution gives a narrow list. So if you are a coordinator and have to transfer a share to a foreign partner, or if an unused balance has to be returned, ask your bank in advance which exception the payment falls under and what documents it will want. The Resolution is amended often, and the answer in last year’s letter may no longer hold.

Exchange rates in the budget and the report

Ukrainian accounting is kept in hryvnia, while the report to the donor is prepared in the donor’s currency, and the two systems produce different figures. The books show exchange differences: the balance on the foreign currency account is revalued at the National Bank rate, and the difference is income or expense unrelated to the project.

The report to the donor follows the donor’s conversion rule. In EU programmes it is written into the grant agreement, and for Horizon Europe it is explained in the article on budget rules. The rate at which you actually sold the currency at the bank is usually not what the report uses. The practical consequence: keep a margin for rate movements in the budget within what the donor allows, and do not promise hryvnia salaries rigidly pegged to a foreign currency amount.

The account in the donor’s system

In EU programmes the bank account is not sent in a letter: it is entered on the Funding & Tenders Portal in the data of the organisation to which the PIC is linked, and confirmed with a bank document or a financial identification form. Until the account is validated, pre-financing will not arrive. In a consortium the coordinator receives the money and distributes it among partners, so partners should look closely at what the consortium agreement says about transfer deadlines.

Typical mistakes

• The account is opened in one currency while the agreement specifies another, and the bank converts at its own rate.
• The organisation’s name in the agreement differs from the name at the bank by one word, and the payment is held for clarification.
• The grant lands on the director’s personal account instead of the organisation’s account.
• Correspondent bank fees are not budgeted, and less reaches the account than was sent.