{"id":18325,"date":"2022-05-10T23:24:38","date_gmt":"2022-05-10T20:24:38","guid":{"rendered":"https:\/\/esquires.ua\/?p=18325"},"modified":"2022-05-10T23:24:38","modified_gmt":"2022-05-10T20:24:38","slug":"war-bonds-are-an-opportunity-for-everyone-to-support-the-country","status":"publish","type":"post","link":"https:\/\/esquires.ua\/en\/war-bonds-are-an-opportunity-for-everyone-to-support-the-country\/","title":{"rendered":"War bonds are an opportunity for everyone to support the country"},"content":{"rendered":"

The <\/span>war<\/span> in<\/span> Ukraine, <\/span>especially<\/span> its<\/span> large-scale<\/span> phase<\/span>, <\/span>stirred<\/span> up<\/span> the<\/span> entire<\/span> civilized<\/span> world<\/span>. <\/span>Our<\/span> society<\/span> shows<\/span> solidarity<\/span> and <\/span>unity<\/span><\/span> at<\/span> this<\/span> time<\/span> of<\/span> the<\/span> most<\/span> difficult<\/span> trials<\/span>. <\/span>Everyone<\/span> is<\/span> trying<\/span> to<\/span> be<\/span> useful<\/span> and <\/span>help<\/span> people<\/span> affected<\/span> by<\/span> the<\/span> war<\/span>, <\/span>the<\/span> Armed<\/span> Forces<\/span> of<\/span> Ukraine, <\/span>other<\/span> military<\/span> formations<\/span> that<\/span> directly<\/span> defend<\/span> the<\/span> country<\/span>, <\/span>putting<\/span> the<\/span> most<\/span> valuable<\/span> thing<\/span> at<\/span> stake<\/span> – <\/span>their<\/span> own<\/span> lives<\/span>.<\/span><\/span>\u00a0<\/span><\/p>\n

In <\/span>addition<\/span> to<\/span> the<\/span> military<\/span> component<\/span>, <\/span>the<\/span> war<\/span> requires<\/span> the<\/span> reorganization<\/span> of<\/span> all <\/span>spheres<\/span> of<\/span> the<\/span> country’s<\/span> life<\/span>, <\/span>its<\/span> economy<\/span>, <\/span>domestic<\/span> and <\/span>foreign<\/span> policy<\/span> for<\/span> maximum<\/span> resistance<\/span> to<\/span> the<\/span> enemy<\/span> on<\/span> all <\/span>fronts<\/span>. <\/span>Emphasis<\/span> and <\/span>priorities<\/span> are<\/span> shifting<\/span> towards<\/span> ensuring<\/span> the<\/span> country’s<\/span> defense<\/span> capability<\/span> and <\/span>resolving<\/span> the<\/span> wave<\/span> of<\/span> humanitarian<\/span> issues<\/span> provoked<\/span> by<\/span> the<\/span> war<\/span>. And <\/span>these<\/span> are<\/span> huge<\/span> unplanned<\/span> funds<\/span> that<\/span> force<\/span> us<\/span> to<\/span> look<\/span> for<\/span> additional<\/span> sources<\/span> of<\/span> financing<\/span> for<\/span> budgets<\/span> <\/span>at <\/span><\/span>all <\/span>levels<\/span>.<\/span><\/span>\u00a0<\/span><\/p>\n

According<\/span> to<\/span> the<\/span> <\/span>calculations<\/span><\/span> of<\/span> the<\/span> Ministry<\/span> of<\/span> Finance, <\/span>the<\/span> Ukrainian<\/span> state<\/span> spends<\/span> about<\/span> $10 <\/span>billion<\/span> <\/span>during the <\/span><\/span>month<\/span> of<\/span> <\/span>military operations<\/span><\/span>! Ukraine <\/span>is<\/span> looking<\/span> for<\/span> funding<\/span> both<\/span> on<\/span> domestic<\/span> and <\/span>foreign<\/span> financial<\/span> markets<\/span>. One <\/span>of<\/span> the<\/span> tools<\/span> to<\/span> raise<\/span> additional<\/span> funds<\/span> is<\/span> the<\/span> so-called<\/span> war<\/span> bonds<\/span>. <\/span>Their<\/span> placement<\/span> began<\/span> after<\/span> the<\/span> adoption<\/span> by<\/span> the<\/span> government<\/span> of<\/span> Ukraine <\/span>of<\/span> the<\/span>\u00a0<\/span><\/span> Rulling<\/span><\/span> \u201cOn <\/span>the<\/span> issue<\/span> of<\/span> bonds<\/span> of<\/span> internal<\/span> state<\/span> loan<\/span> \u201c<\/span>Military<\/span> bonds<\/span>\u201d\u201d <\/span>dated<\/span> February<\/span> 25, 2022 No. 156, <\/span>which<\/span> <\/span>in such way<\/span><\/span> outlined<\/span> the<\/span> intention<\/span> to<\/span> raise<\/span> up<\/span> to<\/span> UAH 400 <\/span>billion<\/span>.<\/span><\/span>\u00a0<\/span><\/p>\n

What are war bonds<\/span><\/b>\u00a0<\/span><\/p>\n

The war bonds are in fact a variety of <\/span>bonds of the internal state loan<\/span><\/a> (<\/span>BISL<\/span>) better known to the masses. From the point of view of the Law of Ukraine<\/span> “On Capital Markets and Organized Commodity Markets”, these are securities that are placed exclusively on domestic capital markets and confirm Ukraine’s obligation to reimburse <\/span>to <\/span>the <\/span>claimants<\/span> of these bonds their nominal value with the payment of income in accordance with the terms of placement. To put it simply, the state actually borrows money from you for a certain period, at the end of which it pays a fixed <\/span>revenue<\/span> and returns the funds received from the investor. In fact, this follows from what is provided in Art. 11 of the Law of Ukraine “On Capital Markets and Organized Commodity Markets” of the legal definition of a bond as a security certifying a loan relationship between the owner of the bond (investor) and their issuer (subject carrying out the initial placement of bonds).<\/span><\/p>\n

The <\/span>very<\/span> name<\/span> “<\/span>war<\/span> bonds<\/span>” <\/span>indicates<\/span> that<\/span> the<\/span> funds<\/span> will<\/span> be<\/span> used<\/span> to<\/span> cover<\/span> the<\/span> needs<\/span> in<\/span> the<\/span> military<\/span> sphere<\/span>. <\/span>This<\/span> is<\/span> justified<\/span> by<\/span> the<\/span> introduction<\/span> of<\/span> martial<\/span> law<\/span> and <\/span>the<\/span> establishment<\/span> by<\/span> Decree<\/span> of<\/span> the<\/span> President<\/span> of<\/span> Ukraine No. 64\/2022 <\/span>of<\/span> February<\/span> 24, 2022 <\/span>of<\/span> the<\/span> <\/span>obligatition<\/span> <\/span>for<\/span> the<\/span> government<\/span> to<\/span> immediately<\/span> provide<\/span> funding<\/span> for<\/span> all <\/span>measures<\/span>. <\/span>However<\/span>, <\/span>the<\/span> legislation<\/span> does<\/span> not<\/span> establish<\/span> the<\/span> obligation<\/span> of<\/span> such<\/span> their<\/span> intended<\/span> use<\/span>. The <\/span>received<\/span> funds<\/span> go<\/span> to<\/span> the<\/span> State <\/span>Budget<\/span> of<\/span> Ukraine and<\/span><\/span> are<\/span><\/span> aim<\/span> to<\/span> cover<\/span> its<\/span> deficit<\/span>. The <\/span>Ministry<\/span> of<\/span> Finance <\/span>of<\/span> Ukraine <\/span>also<\/span> reports<\/span> that<\/span> funds<\/span> from<\/span> war<\/span> bonds<\/span> attracted<\/span> to<\/span> the<\/span> state<\/span> budget<\/span> are<\/span> used<\/span> to<\/span> ensure<\/span> the<\/span> uninterrupted<\/span> provision<\/span> of<\/span> the<\/span> state’s<\/span> financial<\/span> needs<\/span> under<\/span> martial<\/span> law<\/span>, <\/span>both<\/span> social<\/span> and <\/span>defense<\/span>.<\/span><\/span>\u00a0<\/span><\/p>\n

Placement of war bonds<\/span><\/b>\u00a0<\/span><\/p>\n

The issue of <\/span>BISL<\/span> is regulated by the Resolution of the Cabinet of Ministers of<\/span> January 31, 2001 No. 80, which stipulates that the Ministry of Finance of Ukraine acts as their issuer. I<\/span>t<\/span> determines the time and volume of the issue of <\/span>BISL<\/span>, the period of their circulation, the interest rate and other conditions of issue. The Ministry of Finance, on behalf of the state, plays the role of a guarantor of the timely repayment and payment of income on bonds.<\/span><\/p>\n

A <\/span>key<\/span> role<\/span> in<\/span> the<\/span> process<\/span> of<\/span> placing<\/span> BISL <\/span>is<\/span> played<\/span> by<\/span> the<\/span> National Bank, <\/span>which<\/span> serves<\/span> the<\/span> issue<\/span> and <\/span>repayment<\/span> of<\/span> bonds<\/span>. In <\/span>addition<\/span>, <\/span>the<\/span> National Bank <\/span>is<\/span> the<\/span> depository<\/span> for<\/span> BISL, <\/span>ie<\/span> the<\/span> institution<\/span> that<\/span> maintains<\/span> their<\/span> centralized<\/span> accounting<\/span> in<\/span> non-documentary<\/span> form<\/span> (all <\/span>government<\/span> bonds<\/span> are<\/span> issued<\/span> exclusively<\/span> in<\/span> non-documentary<\/span> form<\/span>).<\/span><\/span>\u00a0<\/span><\/p>\n

Primary<\/span> placement<\/span> of<\/span> bonds<\/span> (<\/span>their<\/span> first<\/span> sale<\/span>) <\/span>is<\/span> carried<\/span> out<\/span> among<\/span> primary<\/span> dealers<\/span>, <\/span>the<\/span> list<\/span> of<\/span> which<\/span> is<\/span> formed<\/span> by<\/span> the<\/span> Ministry<\/span> of<\/span> Finance. The <\/span>institution<\/span> of<\/span> primary<\/span> dealers<\/span> was<\/span> introduced<\/span> back<\/span> in<\/span> 2009 <\/span>by<\/span> Cabinet<\/span> Resolution<\/span> No. 363 <\/span>dated<\/span> April<\/span> 14, 2009. To <\/span>participate<\/span> in<\/span> the<\/span> placement<\/span> of<\/span> military<\/span> bonds<\/span>, <\/span>the<\/span> Ministry<\/span> of<\/span> Finance <\/span>published<\/span> a <\/span>list<\/span> of<\/span> primary<\/span> dealers<\/span>, <\/span>which<\/span> included<\/span> Ukrgasbank<\/span>, <\/span>Ukreximbank<\/span>, Alfa-Bank, FUIB and <\/span>the<\/span> Bank<\/span><\/span> Pivdenyy<\/span><\/span>. It <\/span>is<\/span> these<\/span> financial<\/span> institutions<\/span> that<\/span> participate<\/span> in<\/span> auctions<\/span> to<\/span> place<\/span> military<\/span> bonds<\/span> on<\/span> the<\/span> primary<\/span> market<\/span>. <\/span>If<\/span> the<\/span> primary<\/span> dealer<\/span> is<\/span> a <\/span>depository<\/span> institution<\/span>, <\/span>it<\/span> may<\/span> also<\/span> act<\/span> as<\/span> a <\/span>broker<\/span> for<\/span> its<\/span> clients<\/span> (<\/span>if<\/span> they<\/span> are<\/span> depositors<\/span>\/<\/span>customers<\/span> of<\/span> their<\/span> depositary<\/span> institution<\/span>), <\/span>participating<\/span> in<\/span> the<\/span> placement<\/span> of<\/span> bonds<\/span> on<\/span> its<\/span> own<\/span> behalf<\/span>, <\/span>but<\/span> assigned<\/span> by<\/span> and <\/span>at<\/span> the<\/span> expense<\/span> of<\/span> the<\/span> client<\/span>. <\/span>If<\/span> the<\/span> investor<\/span> is<\/span> not<\/span> a <\/span>client<\/span> of<\/span> the<\/span> primary<\/span> dealer<\/span> and <\/span>does<\/span> not<\/span> follow<\/span> the<\/span> announcements<\/span> of<\/span> the<\/span> Ministry<\/span> of<\/span> Finance <\/span>regarding<\/span> the<\/span> next<\/span> placement<\/span> of<\/span> bonds<\/span>, <\/span>he<\/span> has<\/span> the<\/span> opportunity<\/span> to<\/span> use<\/span> the<\/span> services<\/span> of<\/span> licensed<\/span> brokers<\/span> who<\/span> assist<\/span> someone<\/span> in<\/span> acquiring<\/span> military<\/span> bonds<\/span> already<\/span> in<\/span> the<\/span> secondary<\/span> market<\/span>.<\/span><\/span><\/p>\n

Most<\/span> financial<\/span> companies<\/span> in<\/span> the<\/span> war<\/span> bond<\/span> market<\/span> have<\/span> abolished<\/span> their<\/span> own<\/span> commissions<\/span> for<\/span> trading<\/span> and <\/span>custody<\/span> operations<\/span>, <\/span>thus<\/span> helping<\/span> to<\/span> attract<\/span> the<\/span> widest<\/span> possible<\/span> range<\/span> of<\/span> citizens<\/span> who<\/span> have<\/span> expressed<\/span> their<\/span> intention<\/span> to<\/span> purchase<\/span> bonds<\/span>.<\/span><\/span>\u00a0<\/span><\/p>\n

Bonds<\/span> are<\/span> issued through<\/span> intial<\/span> placement<\/span> and <\/span>additional<\/span> placement<\/span>. New <\/span>bonds<\/span> are<\/span> issued <\/span>through<\/span> initial<\/span> placement<\/span>, <\/span>which<\/span>, <\/span>according<\/span> to<\/span> the<\/span> terms<\/span> of<\/span> issue<\/span> and <\/span>the<\/span> amount<\/span> of<\/span> rights<\/span> granted<\/span> to<\/span> their<\/span> owners<\/span>, <\/span>have<\/span> not<\/span> yet<\/span> been<\/span> circulated<\/span>. <\/span>Additional<\/span> placement<\/span> distributes<\/span> bonds<\/span> that<\/span> meet<\/span> the<\/span> terms<\/span> of<\/span> the<\/span> issue<\/span> of<\/span> bonds<\/span> already<\/span> in<\/span> turnover.<\/span><\/span>\u00a0<\/span><\/p>\n

Since<\/span> the<\/span> beginning <\/span>of<\/span> martial<\/span> law<\/span>, <\/span>the<\/span> Ministry<\/span> of<\/span> Finance <\/span>has<\/span> already<\/span> held<\/span> 6 <\/span>auctions<\/span>. <\/span>At<\/span> the<\/span> auction<\/span> on<\/span> April<\/span> 5, 2021, <\/span>more<\/span> than<\/span> UAH 5.5 <\/span>billion<\/span> was<\/span> attracted<\/span> to<\/span> the<\/span> state<\/span> budget<\/span>.<\/span><\/span>\u00a0<\/span><\/p>\n

The National Bank also contributes to the liberalization of the placement of war bonds by simplifying the mechanism for identifying and verifying buyers and stopping scheduled and unscheduled <\/span>on site<\/span> inspections of banks and non-banking institutions for supervision <\/span>in the area<\/span> of financial monitoring, compliance with currency and sanctions legislation for the wartime period. The corresponding decision was approved by the Resolution of the Board of the National Bank of Ukraine dated March 23, <\/span>2022<\/span> No. 60. In addition, during martial law,<\/span> there was <\/span>concealed<\/span> the obligation of the investor to prove the legality of the source of origin of funds for which bonds will be purchased. Now, for <\/span>the purchase of military bonds, all procedures for identifying, verifying individual buyers, as well as signing documents are carried out <\/span>through<\/span> remote communication channels and using electronic signatures.<\/span><\/p>\n

Investment conditions<\/span><\/b>\u00a0<\/span><\/p>\n

Buyers of war bonds, which are placed on the domestic stock market, can be both Ukrainian citizens and companies, and foreigners. The Ministry of Finance offers the market 4 types of military bonds in hryvnia, one in Euros and one in US dollars. The nominal value of one bond is 1,000 monetary units of the currency in which it is nominated.<\/span>\u00a0<\/span><\/p>\n

Each<\/span> of<\/span> the<\/span> individual<\/span> issues<\/span> of<\/span> war<\/span> bonds<\/span> has<\/span> its<\/span> own<\/span> “<\/span>life<\/span> cycle<\/span>” <\/span>from<\/span> 2 <\/span>months<\/span> to<\/span> 1.3 <\/span>years<\/span>. <\/span>Depending<\/span> on<\/span> the<\/span> maturity<\/span> period<\/span>, <\/span>the<\/span> rate<\/span> of<\/span> return<\/span> on<\/span> the<\/span> bond<\/span> is<\/span> determined<\/span>, <\/span>which<\/span> is<\/span> 10-11% <\/span>per<\/span> annum<\/span>.<\/span><\/p>\n

UAH<\/span> short-term<\/span> bonds<\/span> with<\/span> a <\/span>maturity<\/span> of<\/span> one<\/span> year<\/span> are<\/span> sold<\/span> on<\/span> the<\/span> terms<\/span> of<\/span> discounting<\/span> the<\/span> face<\/span> value<\/span> of<\/span> the<\/span> bond<\/span>. <\/span>That<\/span> is<\/span>, <\/span>an<\/span> investor<\/span> buys<\/span> a <\/span>military<\/span> bond<\/span> with<\/span> a <\/span>nominal<\/span> value<\/span> of<\/span> UAH 1,000 <\/span>at<\/span> a <\/span>lower<\/span> price<\/span>, <\/span>which<\/span> is<\/span> a <\/span>discount<\/span>. <\/span>At<\/span> maturity<\/span>, <\/span>the<\/span> investor<\/span> will<\/span> receive<\/span> the<\/span> <\/span>nominal<\/span><\/span> value<\/span> of<\/span> the<\/span> bonds<\/span> he<\/span> has<\/span> purchased<\/span>. The <\/span>investor’s<\/span> income<\/span> in<\/span> this<\/span> case<\/span> will<\/span> be<\/span> the<\/span> difference<\/span> between<\/span> the<\/span> face<\/span> value<\/span> of<\/span> the<\/span> bond<\/span> and <\/span>the<\/span> actual<\/span> purchase<\/span> price<\/span>.<\/span><\/span><\/p>\n

A <\/span>slightly<\/span> different<\/span> mechanism<\/span> for<\/span> conducting<\/span> transactions<\/span> with<\/span> medium-term<\/span> bonds<\/span> (<\/span>maturity<\/span> from<\/span> 1 <\/span>to<\/span> 5 <\/span>years<\/span>). It <\/span>should<\/span> be<\/span> noted<\/span> that<\/span> at<\/span> present<\/span> the<\/span> Ministry<\/span> of<\/span> Finance <\/span>has<\/span> issued<\/span><\/span> only<\/span> one<\/span> type<\/span> of<\/span> <\/span>UAH<\/span><\/span> medium-term<\/span> w<\/span><\/span>ar<\/span><\/span> bonds<\/span> with<\/span> a <\/span>maturity<\/span> of<\/span> 1.3 <\/span>years<\/span> (ISIN UA4000225809). <\/span>Determining<\/span> the<\/span> price<\/span> of<\/span> primary<\/span> sales<\/span> of<\/span> such<\/span> bonds<\/span> is<\/span> somewhat<\/span> more<\/span> complicated<\/span> and <\/span>is<\/span> carried<\/span> out<\/span> according<\/span> to<\/span> the<\/span> formula<\/span> provided<\/span> in<\/span> the<\/span> Basic <\/span>conditions<\/span> for<\/span> the<\/span> issue<\/span> and <\/span>the<\/span> procedure<\/span> for<\/span> placing<\/span> medium-term<\/span> government<\/span> bonds<\/span>, <\/span>approved<\/span> by<\/span> the<\/span> Cabinet<\/span> of<\/span> Ministers<\/span> of<\/span> January<\/span> 31, 2001 No. 80. <\/span>These<\/span> bonds<\/span> are<\/span> interest-bearing<\/span>, <\/span>not<\/span> discounted<\/span>. <\/span>Their<\/span> key<\/span> feature<\/span> is<\/span> the<\/span> obligation<\/span> of<\/span> the<\/span> issuer<\/span> to<\/span> pay<\/span> interest<\/span> after<\/span> a <\/span>certain<\/span> period<\/span> – <\/span>the<\/span> so-called<\/span> coupon<\/span> income<\/span>.<\/span><\/span>\u00a0<\/span><\/p>\n

In other words, <\/span>the<\/span> mechanism<\/span> of<\/span> action<\/span> of<\/span> medium-term<\/span> bonds<\/span> provides<\/span> for<\/span> investment<\/span> for<\/span> a <\/span>longer<\/span> period<\/span>, <\/span>however<\/span>, <\/span>the<\/span> investor<\/span> receives<\/span> a <\/span>part<\/span> of<\/span> the<\/span> total<\/span> income<\/span> from<\/span> the<\/span> bond<\/span> (<\/span>coupon<\/span> income<\/span>) <\/span>on<\/span> clearly<\/span> defined<\/span> calendar<\/span> dates<\/span>. For <\/span>example<\/span>, <\/span>the<\/span> conditions<\/span> for<\/span> issuing<\/span> military<\/span> bonds<\/span> with<\/span> a <\/span>maturity<\/span> of<\/span> 21 of June 2023 (ISIN UA4000225809) <\/span>provide<\/span> for<\/span> 3 6-month <\/span>coupon<\/span> periods<\/span>, <\/span>at<\/span> the<\/span> end<\/span> of<\/span> each<\/span> of<\/span> which<\/span> the<\/span> investor<\/span> will<\/span> receive<\/span> part<\/span> of<\/span> his<\/span> interest<\/span>.<\/span><\/span>\u00a0<\/span><\/p>\n

In all <\/span>cases<\/span>, <\/span>the<\/span> return<\/span> of<\/span> the<\/span> nominal<\/span> value<\/span> (<\/span>redemption<\/span>) <\/span>of<\/span> military<\/span> bonds<\/span> is<\/span> made<\/span> at<\/span> the<\/span> end<\/span> of<\/span> their<\/span> turnover <\/span>period<\/span>.<\/span><\/span>\u00a0<\/span><\/p>\n

By placing mainly short-term “war bonds”, the government in such a way tries to create the most attractive conditions for <\/span>ecouraging<\/span> the widest possible range of private individuals. From the point of view of the psychology of inexperienced investors, a relatively short loan term is perceived as its safety, which makes beginners more daring.<\/span><\/span>\u00a0<\/span><\/p>\n

Benefits of Government Bonds<\/span><\/b>\u00a0<\/span><\/p>\n

In addition to a fairly simple procedure for acquiring war bonds during martial law, the state offers decent legal and financial conditions<\/span> to <\/span>investors.<\/span>\u00a0<\/span><\/p>\n

State guarantee<\/span><\/b>\u00a0<\/span><\/p>\n

Military bonds, like other inner state bonds, are securities that confirm the commitment of the state of Ukraine to return the funds borrowed from investors with the payment of relevant income for the period of use of these funds. In other words, our state is a debtor in its obligations under military bonds.<\/span>\u00a0<\/span><\/p>\n

Art. 16 <\/span>of<\/span> the<\/span> Law<\/span> of<\/span> Ukraine “On Capital Markets and <\/span>Organized<\/span> Commodity<\/span> Markets” <\/span>separates<\/span> the<\/span> issue<\/span> of<\/span> government<\/span> bonds<\/span> and <\/span>transactions<\/span> related<\/span> to<\/span> their<\/span> placement<\/span> and <\/span>redemption<\/span> from<\/span> similar<\/span> procedures<\/span> with<\/span> other<\/span><\/span> investment<\/span> instruments<\/span>. The <\/span>placement<\/span> of<\/span> government<\/span> bonds<\/span> is<\/span> part<\/span> of<\/span> the<\/span> budgetary<\/span> process<\/span>: all <\/span>costs<\/span> associated<\/span> with<\/span> the<\/span> placement<\/span> and <\/span>redemption<\/span> of<\/span> bonds<\/span> are<\/span> covered<\/span> by<\/span> the<\/span> state<\/span> budget<\/span>.<\/span><\/span>\u00a0<\/span><\/p>\n

To <\/span>ensure<\/span> the<\/span> repayment<\/span> of<\/span> obligations<\/span> on<\/span> government<\/span> bonds<\/span>, <\/span>the<\/span> Cabinet<\/span> of<\/span> Ministers<\/span>, <\/span>by<\/span> its<\/span> Decree<\/span> \u201cOn <\/span>Issues<\/span> of<\/span> Bonds<\/span> of<\/span> Internal<\/span> State <\/span>Loans<\/span>\u201d <\/span>dated<\/span> January<\/span> 31, 2001 No. 80, <\/span>directly<\/span> obliged<\/span> the<\/span> Ministry<\/span> of<\/span> Finance <\/span>to<\/span> provide<\/span> annually<\/span> in<\/span> the<\/span> draft<\/span> budget<\/span> the<\/span> funds<\/span> necessary<\/span> for<\/span> the<\/span> repayment<\/span> of<\/span> government<\/span> bonds<\/span>. And <\/span>it<\/span> is<\/span> the<\/span> Ministry<\/span> of<\/span> Finance <\/span>that<\/span> is<\/span> the<\/span> guarantor<\/span> on<\/span> behalf<\/span> of<\/span> the<\/span> government<\/span> of<\/span> the<\/span> timely<\/span> repayment<\/span> and <\/span>payment<\/span> of<\/span> income<\/span> on<\/span> bonds<\/span>.<\/span><\/span>\u00a0<\/span><\/p>\n

The <\/span>return<\/span> of<\/span> the<\/span> investment<\/span> and <\/span>the<\/span> payment<\/span> of<\/span> income<\/span> is<\/span> carried<\/span> out<\/span> at<\/span> the<\/span> expense<\/span> of<\/span> the<\/span> funds<\/span> of<\/span> the<\/span> National Bank <\/span>received<\/span> by<\/span> it<\/span> from<\/span> the<\/span> state<\/span> budget<\/span>, <\/span>which<\/span><\/span> keeps<\/span> records<\/span> of<\/span> them<\/span><\/span>,<\/span><\/span> as<\/span> a <\/span>depository<\/span> in<\/span><\/span> respect<\/span> of<\/span> government<\/span> bonds<\/span>. <\/span>That<\/span> <\/span>means<\/span><\/span>,<\/span><\/span>that<\/span><\/span> the<\/span> investment<\/span> in<\/span> military<\/span> bonds<\/span> is<\/span> guaranteed<\/span> by<\/span> the<\/span> state<\/span>, <\/span>which<\/span> is<\/span> a <\/span>significant<\/span> advantage<\/span> over<\/span> bank<\/span> deposits<\/span>, <\/span>which<\/span> are<\/span> guaranteed<\/span> by<\/span> the<\/span> state<\/span> only<\/span> within<\/span> UAH 200,000 (<\/span>except<\/span> for<\/span> deposits<\/span> with<\/span> Sberbank<\/span>, <\/span>which<\/span> are<\/span> also<\/span> 100% <\/span>guaranteed<\/span>, <\/span>Article<\/span> 57 <\/span>of<\/span> the<\/span> Law<\/span> of<\/span> Ukraine \u201cOn <\/span>Banks<\/span> and Banking <\/span>Activities<\/span>\u201d).<\/span><\/span>\u00a0<\/span><\/p>\n

Income of individuals from investing in government bonds is not taxed<\/span><\/b>\u00a0<\/span><\/p>\n

\u00a0<\/span>According to paragraphs. 165.1.52 p. 165.1 art. 165 of the Tax Code of Ukraine, the amount of investment profit from operations with debt obligations of the National Bank of Ukraine and government securities<\/span> are<\/span> not included in the total monthly (annual) taxable income of an<\/span> individual. In addition, investment <\/span>profit<\/span><\/a>\u202f from<\/span> the<\/span> war bonds are exempt from war tax, which is 1.5%. Instead, investing in another investment instrument that is closest to individuals – a bank deposit – provides for the accrual and payment of an 18% tax and of <\/span>a <\/span>1.5% military tax on the income received from its placement for individuals.<\/span>\u00a0<\/span><\/p>\n

War bond yield<\/span><\/i><\/b>\u00a0<\/span><\/p>\n

The state is currently issuing war bonds with yields of 10-11% in hryvnia, 3.7% in US dollars and 2.5% in Euros. Ukrainian banks offer hryvnia deposits with rates ranging from 6% to 13% per year. As you can see, the state offers a significant level of yield on its bonds that meet market conditions for attracting deposits by commercial banks. And if we take into account the absence of taxation, then the real income from investing by individuals in war bonds will definitely exceed the deposit income.<\/span><\/p>\n

Liquidity<\/span><\/i><\/b>\u00a0<\/span><\/p>\n

One should also remember that military bonds, like other government bonds securities are separate negotiable objects of civil rights. The owner of military bonds has the right to sell them, donate them or otherwise dispose of them during the entire period of their circulation. Trade operations with war bonds on the secondary market are carried out through financial companies that conduct professional activity in the capital markets<\/span>.<\/span><\/p>\n

O<\/span><\/span>bviously<\/span>, <\/span>it<\/span> is<\/span> up<\/span> to<\/span> every<\/span> Ukrainian<\/span><\/span> whether<\/span><\/span> to<\/span> buy<\/span> war<\/span> bonds<\/span><\/span> or not<\/span><\/span>, <\/span>but<\/span> it<\/span> should<\/span> be<\/span> noted<\/span> that<\/span> the<\/span> government<\/span> has<\/span> made<\/span> investing<\/span> in<\/span> this<\/span> asset<\/span> <\/span>to make it <\/span><\/span>as<\/span> accessible<\/span> and <\/span>economically<\/span> attractive<\/span> as<\/span> possible<\/span> for<\/span> an<\/span> ordinary<\/span> Ukrainian<\/span> or <\/span>citizens<\/span> of<\/span> other<\/span> countries<\/span> who<\/span> want<\/span> to<\/span> support<\/span> our<\/span> country<\/span> in<\/span> times<\/span> of<\/span> war<\/span>. In <\/span>addition<\/span> to<\/span> patriotic<\/span> motives<\/span>, <\/span>war<\/span> bonds<\/span> are<\/span> a <\/span>good<\/span> alternative<\/span> to<\/span> bank<\/span> deposits<\/span>, <\/span>which<\/span> are<\/span> generally<\/span> very<\/span> similar<\/span> in<\/span> terms<\/span> of<\/span> the<\/span> mechanism<\/span> for<\/span> <\/span>recieving<\/span><\/span> income<\/span>, <\/span>which<\/span> allows<\/span> you<\/span> to<\/span> diversify<\/span> your<\/span> investment<\/span> portfolio<\/span>.<\/span><\/span>\u00a0<\/span><\/p>\n

Source: <\/span><\/span>yur-gazeta<\/span><\/span>\u00a0<\/span><\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

The war in Ukraine, especially its large-scale phase, stirred up the entire civilized world. Our society shows solidarity and unity at this time of the most difficult trials. Everyone is trying to be useful and help people affected by the war, the Armed Forces of Ukraine, other military formations that directly defend the country, putting […]<\/p>\n","protected":false},"author":4,"featured_media":18237,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false},"categories":[50],"tags":[],"yoast_head":"\nWar bonds are an opportunity for everyone to support the country - Esquires<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/esquires.ua\/en\/war-bonds-are-an-opportunity-for-everyone-to-support-the-country\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"War bonds are an opportunity for everyone to support the country - Esquires\" \/>\n<meta property=\"og:description\" content=\"The war in Ukraine, especially its large-scale phase, stirred up the entire civilized world. 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