Speaking at the meeting of the Verkhovna Rada of Ukraine Committee on Financial Policy and Banking (hereinafter "the Committee"), First Deputy Governor of the National Bank of Ukraine Oleksandr Pysaruk stressed that the National Bank of Ukraine urges the Verkhovna Rada of Ukraine to consider and adopt the draft law On Amendments to Certain Legislative Acts of Ukraine with regard to the development of the institutional capacity of the National Bank of Ukraine.

 As Oleksandr Pysaruk noted, today the institutional capacity of the regulator is not fully in line with the fundamental international principles underlying central bank independence. Considering Ukraine's commitment to implement recommendations made by the IMF mission in the context of the safeguards assessment in an effort to improve NBU governance and strengthen its financial autonomy, the adoption of this draft law represents a critical step in this regard.

"This draft law is a structural benchmark under the IMF program that should be met. Going forward, its adoption will enable it to bring the National Bank much closer to the international standards. This structurally important draft law is more of a long-term strategic document than what can be viewed from today's perspective. It encompasses two major important issues, notably ensuring fiscal independence of the regulator to enable us to pursue an independent monetary policy and enhancing the efficiency of the National Bank as an institution," underlined Pysaruk.

 According to him, last year the funding of the Government by the National Bank of Ukraine reached record high levels, accounting for 40% of the consolidated budget revenues. According to Oleksandr Pysaruk, this situation should be changed. He said that the draft law is intended to amend the procedure of transfer of the profit before distribution to the State Budget of Ukraine to allow the National Bank, first of all, to accumulate the general provisions. The Council of the National Bank of Ukraine is authorized to adopt a decision on setting aside other provisions. It is important to impose a ban on advanced profit transfers to the state budget and release the National Bank of Ukraine from an obligation to inform the government authorities about the estimated profit amount of the National Bank of Ukraine.

 With a view to increasing the institutional independence, the draft law is intended to fundamentally change the working procedures of the Board and Council of the National Bank of Ukraine. It is planned to reduce the number of the members of the National Bank of Ukraine Board and of the National Bank of Ukraine Council to 6 and 9 persons respectively. The draft law is intended to enhance the role of the Council of the National Bank of Ukraine, in particular, by amending and expanding its powers. The Council will oversee the NBU internal control framework and approve the principles guiding the human resources management and risk management policy.

 "We want the Council to be composed of unbiased persons, the economic elite of our country that will be responsible for the monetary policy in concert with the National Bank of Ukraine. With regard to the NBU Board, we want to transform it into a collegial body with greater personal responsibility of its members. It is international common practice and all the central banks operate in such a manner," said First Deputy Governor of the National Bank of Ukraine Oleksandr Pysaruk.

According to him, this Draft Law is designed to ensure financial autonomy for the National bank of Ukraine and strengthen the internal audit at the National Bank, in particular, through the establishment by the Council of the National Bank of an Audit Committee, an advisory body, which is subordinate and accountable to the NBU Council. The possibility is envisaged for independent experts to be appointed as Committee members.

The Committee meeting participants concurred on the importance of this Draft law in the context of the deep transformation of the National Bank of Ukraine as an independent authority, as well as the need to meet the requirements of the International Monetary Fund.

Following the meeting, the Committee recommended that the Verkhovna Rada adopt the draft law On Amendments to Certain Legislative Acts of Ukraine with regard to the development of the institutional capacity of the National Bank of Ukraine as a basis in its first reading.

The Committee members and the NBU management team reached an agreement to join their efforts to finalize this draft law following its adoption by the Verkhovna Rada in the first reading.