A regular meeting of the Financial Stability Council of Ukraine, chaired by NBU Governor Valeria Gontareva, was held on 24 May 2016. The meeting also featured Mr Oleksandr Danilyuk, Minister of Finance of Ukraine, Mr. Tymur Khromaiev and Ihor Pashko, Heads of the National Commissions – Financial Market Regulatiors, and An extended meeting of the Administrative Board of the Deposit Guarantee Fund (hereinafter – the Fund) was held at the National Bank of Ukraine, featuring Ukraine’s Prime Minister Arseniy Yatsenyuk, President's representative in the Cabinet of Ministers Oleksandr Danilyuk, Governor of the National Bank of Ukraine Valeria Gontareva, Ukraine's Finance Minister Natalie Jaresko, Chairman of the Fund’s Administrative Board, First Deputy Governor of the National Bank of Ukraine Oleksandr Pysaruk, and Mr Kostyantyn Vorushylin, Managing Director of the Deposit Guarantee Fund.
The Council has pointed out that the economic situation in Ukraine has improved since the Council’s last meeting held in early March 2016. In particular, inflation has slowed to single digits; the economic recovery is gaining strength; business and household confidence in the banking sector is gradually recovering; the FX market has stabilized. Yet, it takes time for these positive trends to take hold.
At the same time, certain downside risks to financial stability remain. The Council members underlined the need for the successful completion of the second review under the Extended Fund Facility Arrangement. The IMF mission held productive discussions with senior government and central bank officials. Following these discussions, the Ukrainian authorities should channel their efforts toward implementing upfront policy actions needed to secure the disbursement of the next loan tranche from the IMF and unfreeze related official financing from other international partners.
Given these positive developments, the Council members backed a gradual liberalization of FX controls. The meeting participants concurred on the need to lift a surcharge levied on foreign exchange purchase transactions payable to the pension fund.
The Council members also addressed issues related to the operation of state-owned banks. The Ministry of Finance of Ukraine reaffirmed their intentions to implement best corporate governance practices in state-owned banks and launch preparations for the foreign investors' participation in the banks’ equity.
For reference
The Financial Stability Council was established by the Presidential Decree in March 2015. The Board comprises the Governor of the National Bank of Ukraine, the Minister of Finance of Ukraine (co-chairs of the Board), Head of the National Securities and Stock Market Commission, Head of the National Financial Services Commission, Managing Director of the Deposit Guarantee Fund, First Deputy Governor of the National Bank of Ukraine, and Deputy Minister of Finance of Ukraine. The Council provides a forum for professional discussion of risks posing a threat to the country’s financial stability. The Council has held three meetings in 2016. The next meeting has been scheduled for end-July 2016. In early May, the Council published its first Report on Activities.