The National Bank of Ukraine hosted a second meeting with the heads of agricultural enterprises that are pooled for Business Outlook Survey. This time 25 heads of agricultural sector enterprises (large, medium, and small) participated in the meeting. During the event NBU Deputy Governor Roman Borysenko, specialists of the central Bank and an invited representative from the Ministry of Agrarian Policy and Food of Ukraine discussed with the business representatives the NBU’s policy in different areas - monetary policy, banking regulation, steps towards FX regulation liberalization, and more narrow topics of the food industry development in Ukraine, the specifics of surveys of business environment expectations conducted by the NBU among enterprises of the agricultural sector.
In particular, the meeting was devoted to the following topics:
Market surveys: Ukrainian and international experience
Director of Statistics and Reporting Department Yurii Polovniov described the benefits and the procedure for collecting information through survey. The surveys enable us to see the full picture of the state of different economic sectors and obtain data that the official statistics cannot deliver. In addition, surveys allow for two-way communication with the business and the expert community. Such meetings raise understanding of and trust in the regulator’s actions, and also allow us to approximate the business expectations regarding the development of inflation processes to the level of the NBU objectives, which is very important in the inflation targeting regime”, said Yurii Polovniov. He also added that the NBU introduced business surveys as part of the transition to inflation targeting back in 2006 through the NBU regional offices. This function was centralized in 2016, and a survey of financial analysts and banks was introduced. He also stressed that the survey information is one of the factors taken into account by the Monetary Policy Committee and the NBU Board when adopting a decision on the key policy rate.
Video: https://youtu.be/VMPF7RCsXw0
Prerequisites for the bank lending restoration
Ukrainian banks today are capitalized, have funds and are ready to lend. However, today lending restoration is undermined, first of all, by poor protection of creditors’ rights and significant legal risks. This was stated by NBU Financial Stability Department Director Vitalii Vavryshchuk. He noted that judicial reform and legal system reform, as well as the adoption of a law on strengthening creditors’ rights would help to resolve this issue. In addition, it is necessary to solve the problem of non-performing loans. “NPLs represent over 56% of the banking system. Almost two-thirds of them account for state-owned banks. This is a burden that holds back the resumption of lending to Ukrainian banks”, said Vitalii Vavryshchuk. According to him, the profitable activity of companies is being restored and the debt burden indicators will gradually return to pre-crisis levels. This creates new opportunities for building a loan portfolio.
Video: https://youtu.be/Ni_DpSDYpwY
Prospects of food industry development in Ukraine
The Director of the Food Department of the the Ministry Agrarian Policy and Food of Ukraine told about the current state of the food industry in Ukraine, the potential for domestic demand increase and the prospects for domestic food products export. According to him, Ukrainian enterprises began to actively come into foreign markets, since 2016 the share of profitable enterprises began to grow. "In the domestic market we see the potential for increasing production and consumption of milk, meat, fish and fruit. Among the external markets, apart from the EU market, China, Africa and the Persian Gulf countries are the most promising ones, where demand is growing first of all for products of animal origin - milk, meat, eggs, and also sugar”, said Mykola Moroz.
Video: https://youtu.be/ddtJbTKVIuA
In addition, Deputy Director of the Monetary Policy and Economic Analysis Department Volodymyr Lepushynskyi delivered a speech on The Inflation Targeting Regime: Modern Approaches to the NBU Monetary Policy, telling about NBU steps aimed to ensure price and financial stability.
In addition, the participants of the meeting learned more about the current state of the foreign exchange market and saw a presentation of Project and Program Manager of the Open Markets Department, Emal Bakhtari, Foreign Exchange Liberalization - Transition to the Free Movement of Capital Policy in Ukraine. In particular, he told the audience about the factors influencing the dynamics of the FX market, the chronology and logic of the introduction of currency restrictions in the past, and, accordingly, their gradual easing.
Mykhailo Vidiakin, Director of the Strategy and Reform Department, in his presentation Role, Functions, Priority Objectives and Directions of the NBU Development, told the participants about those tasks that the NBU considers to be priorities, changes that have taken place in the central bank during the last years, and today NBU values.