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Ukraine cancels Eurobond after NBU concerns
Journal Staff Report

KYIV, July 2 – Ukraine was forced to cancel a $1.75 billion Eurobond on Thursday after investors had expressed serious concerns over the resignation of Yakiv Smolii, the governor of the central bank, industry sources said.

The Finance Ministry confirmed the cancellation of the Eurobond but had refused to comment on reasons for the move.

The development is a major setback for President Volodymyr Zelenskiy and his government as Ukraine has been struggling with restarting the economy following the outbreak of the coronavirus pandemic.

The investors have originally showed strong appetite for the debt, with yields expected to between 7.3% and 7.4%, down from 7.87% expected originally. However, the situation drastically changed after Smolii had announced his resignation on Wednesday.

In a letter to Zelenskiy, Smolii said it has become impossible for the central bank to effectively cooperate with other state agencies. He complained about “systematic political pressure” on the central bank from undisclosed political figures, suggesting the independence of the central bank was at risk.

The International Monetary Fund, the country’s major lender, warned on Thursday the independence of the National Bank of Ukraine is crucial for the country’s economic reforms and must be ensured when the new governor is appointed.

Zelenskiy and his economic team on Thursday met with the leadership of the NBU amid efforts to find a replacement for Smolii, and assured investors that the independence of the NBU will be preserved.

“An independent National Bank is a guarantee of macroeconomic stability of the state and a guarantee of the well-being of Ukrainians,” Zelenskiy said in a statement. “Therefore, as President, I will defend the independence of the NBU under any leadership as a basis for financial and macroeconomic stability of our state.”

But the Ukrainian business community said the concerns remained over the central bank’s independence and potential withdrawal of lending from the IMF.

"The business community has serious concerns now about the independence of the National Bank of Ukraine and the continuation of the International Monetary Fund program," Andy Hunder, president of the American Chamber of Commerce in Ukraine, told Interfax-Ukraine.

"A strong and independent NBU plays a crucial role in Ukraine's macroeconomic stability, as it is a powerful signal of confidence for foreign investors,” Hunder said. “Therefore, pressure on the NBU Board is a negative signal for investors, international partners and companies that work in Ukraine." (om/ez)




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Currencies (in hryvnias)
  22.03.2024 prev
USD 38.92 39.14
RUR 0.424 0.422
EUR 42.47 42.44

Stock Market
  21.03.2024 prev
PFTS 507.0 507.0
source: PFTS

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