12 July 2010
Ukraine’s parliament, the Verkhovna Rada, approved a bill Friday in the final reading that increases the independence of the National Bank of Ukraine from the executive. The law was one of several International Monetary Fund requirements for Ukraine before it agrees to provide the latter with a new USD 14.9 stand-by loan facility. Specifically, the law extended the term of the NBU governor from five years to seven years, to avoid overlapping with the standard 5-year presidential or parliamentary electoral cycle in Ukraine. The law also stipulates that the governor, his deputies and the bank’s board suspend any political party memberships and cannot hold shares in any commercial lender. It specifies the priority of the NBU. According to the Constitution, the goal of the NBU is to maintain stability of the national currency – hryvnya. The amended law, elaborating on this broad goal, specifies that maintaining price stability is the first priority of the NBU, with next in line to facilitate stability of the banking system, promote stable economic growth rates and support the government’s economic policy when this does not contradict the above goals.