Governor of the National Bank of Ukraine Valeria Gontareva had a monthly meeting with CEOs of the 40 largest banks, which was held at the National Bank of Ukraine on September 8, 2015. “On Sunday we met with Ms. Christine Lagarde, IMF Managing Director, who commended developments in the Ukrainian banking sector. This has been achieved through our joint endeavours - we have succeeded in stabilizing the situation through our joint efforts,” said Valeria Gontareva at the meeting with bankers.

Valeria Gontareva briefed the bankers on the latest positive developments. “The NBU has cut the discount rate from 30% to 27%, presented the Monetary policy strategy for the period 2016-2020, which provides for the transition to an inflation targeting regime, started the liberalization of foreign exchange controls, which became possible only after the completion of the debt restructuring by the Ministry of Finance, and accumulated international reserves up to USD 12.6 billion.  This is just the beginning of our liberalization,” said the NBU Governor.

The NBU’s main task is to ensure price stability, and we have yielded encouraging results in this area. Ukraine’s inflation has slowed down:  a disinflation trend has been observed for the fourth month in a row.  “Inflation is kept under control and deflation has been recorded in the past two months. In 2016, inflation is projected at 12%, in 2017 – 8%, in 2019 - 5%", noted Valeria Gontareva.

The NBU Governor also unveiled plans to accumulate international reserves, which in August alone increased by 21.6%. An IMF mission will be working in Ukraine from 22 September until October 2, 2015.  I hope that all the performance criteria will be met and the third tranche of IMF loan will be disbursed to Ukraine under EFF in October.  If we manage to secure the disbursement of the fourth tranche this year - then our international reserves will have reached USD 18 billion by the end of the year,” noted Valeria Gontareva. She pointed out that the immediate goal of accumulating reserves up to USD 15 billion, sufficient to cover more than three months of future imports, is bound to be attained.

Valeria Gontareva underlined that the banking system is currently hyper-liquid. “The banking sector liquidity has hit record highs.  About UAH 48 billion is held on certificates of deposit, whereas UAH 23-25 billion has accumulated on the correspondent account. In addition, the Ministry of Finance announced that a record UAH 46 billion has accumulated on the single treasury account. The liquidity is ample,” stressed the Governor of the National Bank of Ukraine.

First Deputy Governors of the National Bank of Ukraine Oleksandr Pysaruk reminded the bankers about the need to resolve the problems faced by FX borrowers.  According to him, populist draft laws on restructuring of foreign currency loans pose a real threat to the banking system. Therefore, the banking community should join efforts to come to an understanding on the draft law developed by the Independent Association of the Ukrainian Banks. “If 100% of banks give their backing to the agreed draft law in respect of FX borrowers, we will be able hold consultations with the IMF staff in this regard,” underlined Oleksandr Pysaruk. 

NBU Deputy Governor Oleh Churii briefed the bankers on the steps taken by the regulator liberalize foreign exchange controls. “We have started removing administrative restrictions. The regulator has repealed the requirement to submit a certificate of no outstanding tax liabilities issued by the tax authorities. The National Bank has increased the amount of FX cash  could be withdrawn from clients’ accounts per day from UAH 15,000 to UAH 20,000 and allowed banks not to include the account balances of foreign currency of the 3rd Group of the Classification of Foreign Currencies in case of purchases of foreign exchange by clients,” said Oleh Churii.

Wrapping up the meeting, Governor of the National Bank of Ukraine Valeria Gontareva informed the bankers that the regulator is set to gradually phase out all fx restrictions, and switch to a market-based foreign exchange regulation framework in the middle of the next year.