Poroshenko to hold NBU head nomination until September, media report

Reports that Ukrainian President Petro Poroshenko will nominate Raiffeisen Bank CEO Volodymyr Lavrenchuk as head of the National Bank of Ukraine (NBU) have proven false, the Ukrainian News agency reported on May 4. According to its anonymous source, the president will postpone submitting any nomination to parliament until its next session starts in September. Meanwhile, current NBU Head Valeria Gontareva will not resign immediately, but will take a long vacation, during which the acting NBU head will be first deputy Yakiv Smoliy.

Lavrenchuk’s possible nomination was indicated by Gontareva during her recent visit to the U.S., Ukrainian News reported. She was actively advocating his candidacy, but the president is also considering alternatives, the report said. Among them are Kostyantyn Vorushylin, the former manager of Poroshenko’s bank and current head of the State Deposit Guarantee Fund; and Bohdan Danylyshyn, former Economy Minister and current head of the NBU Council.

Alexander Paraschiy: We agree on the likelihood that no new head will be appointed and Smoliy will be the acting head. Moreover, such a situation could very well last beyond September, in our view. The lack of an approved NBU head reduces the chances that Ukraine will get its next scheduled IMF tranche. But even without this issue, the chances for Ukraine do not look high, as outstanding commitments to the Fund are mostly from the side of Cabinet and parliament.

While the idea of appointing Lavrenchuk was welcomed by IFIs, his key drawback is that he looks much more independent from Poroshenko than other candidates. Also, the information that he was selected by Gontareva, whose reputation in Ukraine has been significantly spoiled, may make it hard to get him approved by parliament.

Nevertheless, in our view, Lavrenchuk would be the best replacement for Gontareva of all the considered candidates. Of the three listed by Ukrainian News, in our view the most risky is Danylyshyn, who is advocating a soft monetary policy.