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What Hontareva Managed to Do And Who Should Replace the Former Head Of the NBU

11.04.2017 The Head of the National Bank Chairman Valeriya Hontareva officially announced that she will retire on 10th of May. CASE Ukraine`s CEO Dmytro Boyarchuk claims in an article for the “Novoye Vremia” (‘New Time’) media outlet that the NBU is almost the only institution that was successful in reforms-doing and did most of what needed to be done.

Hontareva did the heaviest work. She cleaned the banking system and introduced a floating exchange rate.

The introduction of floating exchange rate was positive, because our economy generates depreciatory potential in a system. We have the resource structure of the economy and we are very dependent on foreign markets. If you agree to keep the course, you are doomed, because sooner or later it will collapse. It is politically futile. For the realities of the Ukrainian economy, the only option to survive and to build a system height is to have a floating exchange rate. Then, as soon as you accumulate depreciation potential, this course provides an opportunity to let off steam.

Devaluation charges to Hontareva are unfounded, because since the end of 2013 the current account deficit amounted up to 9% of GDP. These figures entail a monetary shock.

Part of the responsibility for currency fluctuations lies with the Ministry of Finance, because there was no liquidity usage planning. For example, the last increase in the cost of currency in early January was due to the fact that the Finance Ministry accumulated a lot of money at the end of the year, and then threw it out.

Hontareva managed to fulfill almost all the tasks that were earlier set. But we needed bolder steps in the liberalization of the currency market. We need to create a futures market that would allow canceling all currency restrictions.

Now we are told Hontareva can be replaced by Mr. Lavrenchuk or Mr. Speck. They are considered by market players and foreign investors as looking pretty optimistic. But if a person from the President`s ‘family’ (a political figure) is the appointed, the same IMF and other donors may interpret this as a counter-reformation.