Governor of the National Bank of Ukraine Valeria Gontareva has pointed out that the domestic economy is firmly set on the path to gradual economic recovery.  “The data covering the period since April 2015 suggest modest, albeit steady, economic growth.  In my view, the economy has already bottomed out and there are all signs that the economy is set on the path to gradual economic recovery,” she said, speaking at a regular meeting with CEOs of the 40 largest banks, which has been held at the National Bank of Ukraine today.

According to Valeria Gontareva, both headline and core inflation has remained low for two months in a row, suggesting that anti-inflationary measures taken by the regulator have proven effective.   “In order to consolidate the positive developments in the money market and preserve stability in the financial market, the National Bank of Ukraine left the discount rate unchanged at its current level,” she said to the representatives of the banking community, adding that there is room for optimism that the situation will remain controllable in the future.

Valeria Gontareva also said that Ukraine is firmly on track with its commitments undertaken before the international donors, and counts on receiving the scheduled support from the international community.   In particular, she welcomed the IMF's Executive Board decision to disburse the second tranche of USD 1.7 billion under the IMF’s EFF. “The funds that we have received the IMF today will be used to replenish the international reserves.  Overall, our international reserves are steadily growing and by the end of 2015, they are expected to have reached almost USD 18 billion,” said the Governor of the National Bank of Ukraine.

She drew the bankers' attention to the excess liquidity in the banking system and encouraged banks to resume lending to the real economy.  Valeria Gontareva stressed that the National Bank of Ukraine has recently accumulated the bulk of property pledged by banks as collateral against refinancing loans.  “The National Bank intends to launch a transparent process of disposing of collateral pledged for these loans. We invite all market stakeholders to take part in this process as we have high quality real estate assets and attractive portfolios of consumer loans,” she added.

First Deputy Governor of the National Bank of Ukraine Oleksandr Pysaruk briefed the attendees about the progress made in conducting the diagnostic exercise for the banks and timeframes set to get the banking system fully capitalized based on the results of the diagnostic exercise. He also spoke about the efforts by the regulator to streamline the regulatory framework with regard to the assessment of credit risks in banks’ activities and diagnostics of the amount of related party lending.

Another issue that was raised at today’s meeting was the restructuring of consumer loans in foreign currency. Governor of the National Bank of Ukraine Valeria Gontareva drew the bankers’ attention to the fact that although a populist draft law No.1558-1 would never be enacted, social issues need to be addressed.  This issue should be legally settled so that banks will meet their obligations as to loan restructuring. “This draft law has to be a common consolidated position of the banking community and shall apply solely to the vulnerable social groups and social housing,” stressed the Governor of the National Bank.

Wrapping up the meeting, Governor of the National Bank of Ukraine reminded the bankers that the regulator is set to phase out administrative restrictions in the foreign exchange and money markets and asked the bankers to express their views as to what should be done in the first place.