During the meeting, the participants discussed the situation in the money market and legislative initiatives in the area of financial market development. Commenting on developments in the domestic foreign exchange market, Governor of the National Bank of Ukraine emphasized that the market is virtually balanced and sustainable. The National Bank of Ukraine actively uses the instruments available at its disposal, including verification of import contacts and foreign exchange interventions. Valeriia Gontareva also noted that the reasonable demand for foreign exchange would be gradually met in full.
Deputy Governor of the National Bank of Ukraine Dmytro Sologub reported on the macroeconomic forecasts recently approved by the Monetary Policy Committee of the National Bank of Ukraine. In particular, he emphasized that the regulator would apply new calculation methods and introduce new rules governing the publication of GDP growth and inflation projections that will be revised on a quarterly basis and published in the Inflation Report, a new information product produced by the regulator, to be posted on the NBU's website on April 2, 2015. The publication of the Inflation Report is part of the run-up to the gradual adoption of inflation targeting. This paper will highlight economic developments in different sectors and the regulator's projections and outline the NBU's monetary policy measures. The estimates have been agreed with the Ministry of Finance of Ukraine and the Ministry of Economic Development and Trade of Ukraine.
"According to our current projections, GDP is estimated to contract by 7.5%. However, next year GDP stands good chances of rebounding back into positive territory with growth of 2 – 3%.The rate of inflation in Ukraine is recorded at 34.5%, but the trend is expected to reverse by end-2015, bringing inflation down to 30%. Next year, inflation is expected to fall drastically to 13 – 14%,” noted Dmytro Sologub. He also pointed out that Ukraine got the balance of trade back on track. Merchandise imports have fallen drastically (-34%) amid the merchandise exports adjustments (-32%).
During the meeting, the participants assessed the progress made by the National Bank of Ukraine in drafting legislative amendments. Director of the Legal Department Viktor Novikov said that:
The National Bank of Ukraine had received proposals from Ukraine's President on the draft law on creditors' rights protection, which would soon be finalized and tabled to the Parliament for consideration;
On March 20, 2015, a draft law (registered as No 2449) amending Article 8 of the Law of Ukraine On Measures to Facilitate Bank Capitalization and Restructuring was tabled to the Parliament for consideration;
The National Bank of Ukraine had already prepared legislative amendments intended to scrap a military levy of 1.5%, effective from March 13, 2015, which is charged on income derived from transactions involving the transfer of ownership of foreign exchange valuables.
Viktor Novikov also noted that a draft law on amendments to some legislative acts of Ukraine (with regard to the terms of repayment of time deposits) is pending for consideration by the Verkhovna Rada of Ukraine. The draft law is intended to amend the Civil Code of Ukraine and the Law of Ukraine On Securities and Stock Market governing the payment of principal amount and interest on savings certificates (certificates of deposit) to allow bank customers to receive the principal amount and accrued interest under the term deposit agreement after the expiration of the agreement.
The Verkhovna Rada Committee on Tax and Customs Policy has recommended a draft law registered as No 0939 on amendments to the Tax Code of Ukraine (with regard to restructuring of debt obligations under foreign currency loan agreements through the loans' conversion into Hryvnia) for approval by the parliament. The new draft law has been drawn up with taking into account proposals made by the National Bank of Ukraine. Under a new draft law, the individual borrower's income derived from a partial debt forgiveness is exempt from individual income tax. "Hence, legislative efforts are under way," said Viktor Novikov.
Overall, the CEOs of banks acknowledged that measures put in place by the National Bank of Ukraine in the foreign exchange market had proved effective and efficient, with the situation showing signs of stabilizing. No feverish demand for foreign exchange has been recorded in the cash segment of the foreign exchange market over the past month. The banks reported growth in their deposit base over the past week.