Six months after Valeriya Gontareva stepped down from the
top job, her position remains vacant, with Yakiv Smoliy, her
first deputy, still in acting charge. While seemingly closing in
on a candidate in the summer, Poroshenko hasn’t submitted any
names to parliament for approval. A spokesman for the president
didn’t answer calls seeking comment.
The delay is harmful, according to Dmytro Sologub, one of
four other deputy governors. While Volodymyr Lavrenchuk, head of
Raiffeisen Bank International AG’s local unit, was initially
deemed the frontrunner to lead the central bank, it’s currently
unclear who’s under consideration.
“Institutionally, the governor is needed because we’re
talking about the trust of markets,” Sologub, 39, said Wednesday
in an interview in his office in Kiev. “And of course, the
governor means the trust of international financial
The bank is key to helping Ukraine maintain aid flows from
its $17.5 billion bailout, court investors as the nation returns
to foreign debt markets and battle inflation that’s reached its
highest in 1 1/2 years. The hryvnia has lost 1.8 percent against
the dollar since Gontareva’s exit on May 10, while economic
growth has slowed and transfers from the International Monetary
Fund have been held up as the government fails to stick to its
Despite lacking a permanent leader, monetary-policy makers
haven’t held back in defying government calls to lower borrowing
costs. Faced with resurgent inflation, the bank unexpectedly
lifted its benchmark interest rate last week for the first time
since March 2015.
“The market probably didn’t expect the rate hike,” Sologub
said. “People told us that ‘we didn’t think you’d be able to
take such a decision as you’re in limbo.”’
Like under Gontareva, the bank also remains a firm backer
of reforms championed by the IMF. Current initiatives include
accelerating privatization and setting up a court to handle
anti-corruption cases, though the latest aid disbursement is
being held up with the two sides lacking agreement on issues
such as pensions and natural gas prices for households.
Sologub says the government should consider signing a new
IMF deal after the existing one ends in 2019.
“The IMF’s program disciplines -- the IMF has the biggest
leverage on Ukraine,” Sologub said. “From the point of view of
progressing with reforms, from the point of view of signals to
private investors, it would be too early for Ukraine to stop
Well said from Solugub - who has been doing an excellent job also as chief economist at the NBU.
Yakiv Smoliy also I think has generally impressed during his stint as deputy governor and, as reflected in the last rate hike.
Rumors still abound as to who Poroshenko might ultimately name as NBU governor.
Hard to understand as to why Poroshenko is delaying this process so long - unless he is unsure as to whether he can secure majority backing in the Rada for a replacement finally to be named to replace Valeria Gontareva who resigned as governor in April.
The delay might be a sign of his own weakness. He might be concerned still that whoever he nominates he will have to expend political capital with his coalition partners to get Rada sign off for his nominee. Some of his coalition partners might also have their own eye on the position.
In this latter respect there have been long running rumors that Arseniy Yatseniuk, the former PM, might rather like to move to the NBU governor post, which he briefly held in an acting capacity a decade or so ago. [Wiki: From November 2003 to February 2005, Yatsenyuk served as the first vice-president of the National Bank of Ukraine under Serhiy Tihipko. After Tihipko left the National Bank, Arseniy Yatsenyuk was put in charge of it.]
Poroshenko also likely wants loyalty from any new NBU governor. This might suggest that he is testing Smoliy out in the job, or ultimately is still positioning someone else in his inner circle for the job - I can think of a few likely candidates therein.
Timothy Ash is senior sovereign strategist for emerging markets at BlueBay Asset Management in London and a member of the UBJ Editorial Board.