Governor of the National Bank of Ukraine Ms Valeria Gontareva has met with Mr Dominique Strauss-Kahn, former IMF managing director (2007-2011) and a member of the Supervisory Board, Bank Credit Dnepr PJSC.
The meeting participants discussed the key problems and challenges facing the domestic banking sector that have direct implications for the country's economic growth and relations with foreign investors.
Ms Gontareva underlined that the financial sector reforms will not yield the results expected by Ukrainian citizens, partners and Ukraine's international donors unless we implement tough and effective across-the-board anti-corruption measures and eradicate political populism.
“The NBU takes a strong stance on the need to implement the financial sector reforms, but we are aware that not everyone approves and supports our reform efforts. However, there is an understanding that reforms are not meant to be easy and painless. For instance, progress is achieved in improving the banking sector transparency, unwinding related-party lending and increasing the capitalization of banking institutions thanks to the banking sector clean-up. Without undertaking a radical overhaul of other sectors, the economy will be unable to operate effectively and deliver growth. We can see that sometimes it is difficult for parliament to adopt critical financial draft laws or courts overthrow the NBU’s decision declaring banks insolvent, thus revealing the existing shortcomings of the judicial system.
In his turn, Mr Strauss-Kahn cited the reluctance by some Ukrainian politicians to tackle corruption not in word but in deed as an impediment to economic growth.
“The Ukrainian public, western partners, and foreign business have the same expectations. They all want to see reforms implemented in the country, indicating Ukraine’s readiness to become an open economy. They all want to be sure that the law enforcement and judicial authorities are on the side of justice. Businesses ask a question: “Is there a guarantee that we will have a comfortable and transparent business climate here?” Ukraine urgently needs reforms in the public sector and in the judicial system,” underlined Mr Dominique Strauss-Kahn.
The NBU Governor backed the need for judicial and law enforcement reforms.
“It will be impossible for banks to resume lending without having a fair judicial system in place. In 2015, parliament passed a law increasing the responsibility of management and banks’ owners for driving banks into bankruptcy. However, no one has been brought to justice so far. I would like to stress that the NBU has provided the law enforcement authorities with all the documents required to initiate criminal proceedings.
The former IMF chief expressed hope that the country’s authorities will take adequate measures and focus their efforts on implementing law enforcement and judicial reforms.
“I understand that it will be difficult to eradicate to corrupt practices in a country that has been plagued by decades of corruption. But if Ukraine wants to become a respected member of the global community it needs to go through this painful path,” said Mr Dominique Strauss-Kahn.