Illarionov said that Gontareva action led to a currency panic and crisis
Andrei Illarionov: as a result blossomed a black market currency, and with it, and shady businessmen – currency changers
Photo: Sergey Krylatov / Gordonua.com
The actions of the head of the National Bank of Ukraine Valeriya Gontareva to the post led to a currency panic, embezzlement of international reserves and the crisis, stated Russian economist and political scientist, an expert of the Washington Cato Institute Andrei Illarionov.
April 20, he spoke in Washington at the round table “Real economic reforms of Ukraine?” held under the auspices of the analytical center Foreign Policy Initiative, according to “Business capital”. The publication presents the full text of the report.
Illarionov said that the fall of Ukraine’s economy was affected by the Russian aggression, but not one she was the cause of the crisis. The economist points out that peak incidence was in 2014 as you would expect, but for 2015, despite a significant reduction in violence. And recovery did not begin in 2015, as expected, and in the first quarter of 2016, and in subsequent quarters, growth has slowed significantly.
“The analysis allows us to answer the above questions: the main reason for the worsening of the economic situation in Ukraine in 2015-2016 (along with the military aggression and destabilising actions of the Russian leadership) has become the interventionist policy of the National Bank of Ukraine”, – said the expert.
Before assigning Gontareva, on 21 may 2014, Ukraine had $17.9 billion of international reserves, he recalls, and over the next nine months, they decreased by $12.3 billion to $5.6 billion This caused a deep currency crisis, peaking in February 2015, the panic has caused the catastrophic decline of the national currency: from 11.8 UAH/$ to 24.5 UAH/$.
“How artificial and quite easily avoided had this, it seems, deliberately provoked the crisis, shows little changed exchange rate of hryvnia to the dollar in the next two years – from February 2015 to February 2017. During this time, the national currency fell by only 10%, despite the cumulative reduction of GDP by 10%, accumulated inflation in 57%, maintaining the overall budget deficit in the range of 1.2% to 3.7% of GDP per year”, – says Illarionov.
6 February 2015, the national Bank imposed restrictions on the foreign exchange market, justifying their sharp devaluation, and this led to the “virtual paralysis of the payment and settlement operations in Ukraine and substantial limitation of its economic transactions with the outside world.” Due to this effect foreign exchange transactions began to go dark.
“According to the Ukrainian credit-banking Union, the share of the shadow currency market rose to 50%, which intensified the devaluation pressure on the hryvnia and impacting the official foreign exchange market. The result blossomed a black market currency, and with it, and shady businessmen – currency changers, while law-abiding banks lost some of its competitiveness, has worsened the crime situation, citizens have lost some savings,” added the economist.
Initiated by the NBU “clearance” of the banking sector Illarionov called “a truly deadly blow” and noted that a few banks have escaped the crisis, so they attract special attention.
“So, for example, a small Bank for the half year was able to increase its net assets by UAH 1.5 bn, they grew by almost 70%, an unprecedented figure for the banking system of Ukraine in crisis. A curious coincidence – the Bank is owned by group “Investment Capital Ukraine” (IR), as Chairman of the Board of Directors of which prior to his appointment as head of the NBU Valeria Gontareva held. In addition, 22.7% of the Bank “Avangard” belong to the citizen of the Russian Federation Galina Uljukaeva being the wife of Yury Solovyov, Deputy Chairman of the Russian state Bank VTB, the second biggest capital in the Russian Federation”, – he stressed.
The economist added that by December 2016, banks with Russian capital have increased their presence in Ukraine up to 40%.
“It should be noted that among them there are banks with 100% participation by the Russian state, that, in particular, “Sberbank”, VTB and “Prominvestbank”, in which the proportion of shares owned by Russia, is 97,5%. The Bank also received refinancing from the NBU,” – said Andrei Illarionov.
10 APR 2017 Gontareva has announced that it has submitted to the President of Ukraine Petro Poroshenko a letter of resignation at own will from may 10 from the post, which was held from 10 April 2014. On April 13 it stated that he had discussed his resignation with the President within three months.
She also noted that the next meeting of the Board of the NBU’s monetary policy, scheduled for may 25, will be chaired by her successor.