Ukraine president calls for rate cut amid accusations of central bank harassment

Ukraine's President Volodymyr Zelenskiy on Thursday called for the central bank to cut interest rates as he geared up to nominate a new central bank chief following the shock departure of Governor Yakiv Smoliy last week. Smoliy resigned saying the central bank was under "systematic political pressure".


Reuters | Updated: 09-07-2020 20:32 IST | Created: 09-07-2020 20:32 IST
Ukraine president calls for rate cut amid accusations of central bank harassment

Ukraine's President Volodymyr Zelenskiy on Thursday called for the central bank to cut interest rates as he geared up to nominate a new central bank chief following the shock departure of Governor Yakiv Smoliy last week.

Smoliy resigned saying the central bank was under "systematic political pressure". His exit rattled the market and forced the government to postpone a Eurobond issuance while seeking to reassure investors that reforms remained on track. He complained the president's office and the government among others had tried to push him into taking decisions that were bad for the economy, including cutting rates too quickly and letting the hryvnia devalue.

Smoliy, who also complained of harassment against central bank officials, tweeted a picture of a mock coffin, funeral wreaths and placards put outside his home by unknown people. His predecessor Valeria Gontareva similarly complained that a mock coffin with a cut out of her face had been placed at the entrance to the central bank. She resigned in 2017.

Zelenskiy's administration denies putting undue pressure on the central bank. Smoliy's successor could be installed as early as next week. "We have been struggling with this for about a year, talking with the National Bank very seriously so that the discount rate is reduced so that people can afford a loan," Zelenskiy said at a meeting with businesses, according to Interfax Ukraine.

He said the rate was too high but stressed "this is my impression". He signalled on Wednesday he thought the hryvnia was too strong and had driven some companies out of business. Former central bank chief Gontareva called this week for the International Monetary Fund to freeze loans to Ukraine until a new governor with reformist credentials was appointed. That prompted the state security service to issue a statement, saying it was unacceptable to make comments that could "sow panic".

The IMF agreed a new $5 billion deal for Ukraine in June that stressed the central bank should remain independent. (Editing by Toby Chopra)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Give Feedback