Ukraine’s central bank governor said he would no longer rely on “dangerous” financial loans to finance the war with Russia, adding that the “open confrontation” with the government over the issue had been resolved. .
Andriy Pyshnyy, the 48-year-old president of the National Bank of Ukraine, said in an interview with the Financial Times that when banks were forced to print billions of hryvnia last year, they “posed a huge risk to macro-financial stability.” Told. to make up for the budget shortfall.
“It was a quick cure, but it was very dangerous,” Pishny said. He wears multiple leather and silver wristbands on his tattooed arm, as well as the standard hoodie worn by Ukrainian officials today.
The Treasury was reluctant to tap into the domestic bond market or raise revenues instead. Course has since changed, paving the way for his $15.6 billion loan agreed between the IMF and Kiev last week, which still requires approval from the fund’s board.
A moratorium on currency lending, access to the domestic bond market, and measures to increase tax revenue are embedded in the IMF agreement.
Economists feared Ukraine could plunge into a hyperinflationary spiral last year as it printed banknotes to make up for delays in payments of financial aid from the EU.
Critics said the government should instead have tightened its belts, borrowed from Ukrainian banks and raised taxes and tariffs. repeated, escalating tensions with the government.
Pishny, a former banker who lost his hearing at the age of 34, succeeded Shevchenko in October.
On his first day in office, he set out to mend relations with the government and met “late into the night” with Finance Minister Serhii Marchenko. They reached an agreement for the central bank to adjust bank reserve requirements and for the Treasury to offer more attractive terms to lenders.
Pyshnyy said the NBU’s aim is to absorb excess liquidity through tighter reserve requirements and gradually return to a floating exchange rate.
He said the IMF had made a “revolutionary” policy change by agreeing to lend to Ukraine during a period of extraordinary economic uncertainty caused by Russia’s aggression.
The IMF agreement would help “a coalition of donors commit to providing about $40 billion in aid” this year, he added.
Ukraine has a poor record of meeting IMF requirements during a series of bailouts. But Kiev built confidence by meeting targets set by the fund during a four-month “oversight program with board engagement” over the winter, Pyshnyy claimed.
He said the NBU will revise its GDP growth forecast for 2023 down to just 0.3% next month.
The new projections do not take into account additional Western aid for reconstruction, which Pishni hoped would serve as a “wonder bullet” for the economy.
