The new head of the NBU talks about further prime rate decline

UKRAINE - In Brief 21 Jul 2020 by Dmytro Boyarchuk
On July 20th President Zelenskiy introduced the new head of the NBU, Kyryl Shevchenko. As his first message, Mr. Shevchenko mentioned (a) intensified credit for economic activity revival, (b) reduction of the NPL portfolio, (c) macro-financial stability, and (d) intensified cooperation with international partners. He also emphasized that he is determined to preserve the achievements of the last five years. At the same time, he claimed that he intends to ease requirements for transparent and good quality borrowers. Also he said that the NBU will work in cooperation with the Cabinet to launch economic growth. Mr. Shevchenko intends to limit banks’ investments into long-term state securities. Also he made it clear he will not resist the hryvnia depreciation, which started after July 1st when Yakiv Smoliy submitted his resignation letter. Kyryl Shevchenko stated openly that the NBU should continue further prime rate cuts for the sake of cheaper loans for the economy. On Privat Mr. Shevchenko said the policy of the previous management will remain unchanged. No uncontrolled hryvnia printing. A very controversial impression from this first communication. The new head of the NBU promises to do everything the previous management of the NBU was doing, except for more aggressive credit for the economy. Why was the total reshuffle was initiated, then? Observers are skeptical about the words of Shevchenko. The hryvnia has already lost nearly 3.5% since July 1st. Allegedly non-residents are actively withdrawing from hryvnia-denominated state bonds. Shevchenko said he will be seeking more active cooperation with IFIs. But that was the last point on his list of priorities. And we doub...

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