IMF politely criticizes reprimand of NBU executives

The process of ensuring the accountability of the
board of the National Bank (NBU) should adhere to its governance framework, IMF
Resident Representative in Ukraine Goesta Ljungman said on Oct. 8, as reported
by Interfax-Ukraine. This framework has been developed in consultation with IMF
staff during previous IMF-supported programs, he said. “The framework has
served the NBU – and the Ukrainian economy – well by strengthening confidence
in the NBU as an independent and professional central bank, while improving the
credibility and effectiveness of the NBU’s policies,” Ljungman said.

Recall, the NBU Council voted on Oct. 2 to reprimand
two NBU executive board members Kateryna Rozhkova and Dmutro Sologub, as well
as declared its distrust in them. NBU management and council members have spent
this week explaining the decision and its possible implications.

Alexander Paraschiy: The IMF’s
message suggests the fund is supporting Rozhkova and Sologub, the only NBU two
board members that have a tenure of longer than three months and who have
experience working to “strengthen confidence in the NBU” in the IMF’s eyes.

This confirms our view that Ukraine can
significantly spoil its relations with the IMF, and thus delay the negotiations
on new loan tranches, if both board members leave their positions. Therefore,
we are confident that the power brokers will only dare to try dismissing them
if there is clarity in the government that an IMF deal is impossible in the
nearest 3-6 months.