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Nation    

IMF urged to ensure NBU’s independence
Journal Staff Report

KYIV, July 6 – The International Monetary Fund must act decisively and perhaps suspend payments to Ukraine in order to protect the independence of the country’s central bank, former NBU governor Valeria Gontareva said.

Gontareva, who was the governor in 2014 through 2017, lives in London, commented on recent resignation of Yakiv Smolii from the post of the governor of the National Bank of Ukraine that he had blamed on “systemic political pressure.”

“The IMF and the G7 countries have said lots of nice things about ‘respecting central bank independence’, but that has had no impact. When the central bank governor resigns, you can’t just issue these statements,” Gntareva told Central Banking. “To defend the reforms we made, the IMF should announce that it is not making any further payments to Ukraine unless [President] Zelensky appoints a governor who will safeguard reforms.”

The IMF should even consider demanding the repayment of its previous support for Ukraine, she said. “Those tranches were paid under the agreement that there would be central bank independence and economic reform,” Gontareva said.

Without pressure from the IMF and Western leaders, Zelenskiy will probably appoint the governor that will not be independent and that will undermine stability of the country’s banking system, she said.

Powerful businessman Ihor Kolomoyskiy, who is believed to help Zelenskiy run his presidential campaign in 2019, may have organized campaign to force resignation of Smolii in order to regain ownership of his Privatbank, Gontareva said.

Kolomoyskiy has been trying to regain control of the country’s largest lender, PrivatBank, which was nationalized after the central bank accused him of massive fraud.

He was one of two co-owners of PrivatBank, before it was nationalized in December 2016 by Ukraine’s then-president Petro Poroshenko at the central bank’s request. The central bank commissioned a report by US-based firm Kroll accusing Kolomoisky and his co-owner Gennady Bogolyubov of having stolen at least $5.5 billion from the firm.

Kolomoyskiy and Bogolyubov denied the allegations. Kolomoyskiy suggested on several occasions that he is determined to regain ownership of Privatbank.

“The pressure wasn’t just on the central bank leadership, but on the leaders of PrivatBank,” Gontareva said. The [pressure] also aims to make the central bank and the PrivatBank leadership drop lawsuits to recover the allegedly stolen assets, Gontareva said.

The NBU and PrivatBank are pursuing legal actions against Kolomoyskiy and Bogolyubov in England, the US, Switzerland and Israel. Ukraine’s parliament passed a law in December that formally safeguarded the nationalization of PrivatBank after coming under strong public pressure from the IMF’s managing director.

IMF head Kristalina Georgieva stated publicly in December 2019 that it would only back further financial aid for Ukraine if the government supported financial reformers. Ukraine received several billion dollars of IMF aid between 2015 and 2019 and was negotiating a new package.

The Ukrainian parliament, with strong support from Zelensky’s administration, passed a law in effect guaranteeing the central bank’s reforms on May 13. Nine days later, the IMF announced it had approved a package worth $3.6 billion over the next 18 months. (tl/ez)




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