Valeria Gontareva
According to experts, the problem is not how to fire the head of the NBU, but how to find a competent leader for the regulator.
December 19th marked six months since Valeria Gontareva ( read more about her in the article "Valeria Gontareva: The Glitter and Machinations of the Queen of Coins ") took office as the tenth governor of the National Bank of Ukraine. During her tenure, the country's top banker was noted for her controversial management style in the financial market, as well as for the fall of the national currency's cash exchange rate by a third – from 12 to 16 UAH/USD. On the day of Ms. Gontareva's report to journalists, Segodnya recalled the main scandals related to the lawsuit, the purge of the regulator's ranks, and MPs' attempts to remove her from the NBU governor's chair.
HAPPY TO FIRE. In late November, MPs Dmytro Svyatash and Valeriy Pysarenko registered Bill No. 1055 in the Verkhovna Rada, proposing the dismissal of NBU Governor Valeria Gontareva. According to Dmytro Svyatash, one of the bill's authors, six months in the post was enough to demonstrate results. Instead of accomplishments, the MP lists shortcomings in the regulator's policies—the 45% hryvnia devaluation, selective refinancing, and problems at banks. Gontareva, for her part, responded categorically to the MPs' initiative: "This bill clearly puts pressure on me as the NBU Governor and on my team."
It's still unclear how the parliamentarians' attempt to fire the NBU governor will be resolved. As of December 25, Svyatash and Pisarenko's bill had been submitted to the committees for review. As a reminder, back in late August, a similar bill, No. 4545, was registered in the Verkhovna Rada by MP Nestor Shufrych.
Experts believe the issue of dismissing the NBU governor needs to be considered more broadly: "She could be fired, but appointing a new NBU governor in Ukraine is very difficult. The coalition in the Verkhovna Rada is currently mired in political intrigue. Therefore, in this situation, it's difficult to agree on a candidate for the new NBU governor. There are too many candidates from different political forces. Therefore, she will be retained until a compromise candidate is found who can pass the NBU vote without any problems," says Oleksandr Okhrimenko, president of the Ukrainian Analytical Center.
PURGE AT THE NBU. In the fall, the situation around the regulator escalated due to personnel changes among the NBU's top managers. For example, in mid-October, it was announced that Vira Rychakivska, Deputy Governor of the National Bank, had been dismissed due to retirement. She had worked in the banking system for 38 years, 21 of which were at the NBU. And in early December, it was announced that Olena Shcherbakova, Director of the NBU's General Department of Monetary Policy, had been dismissed from her position. According to the regulator, Shcherbakova left the National Bank of her own accord after nearly 20 years of service, having become a member of the NBU's Board in 2011.
Experts explain these personnel changes simply: the NBU attempted to restructure the entire agency, but unfortunately, this attempt has so far been unsuccessful. "There were attempts to strengthen the NBU's management with new personnel, who, it was hoped, would help Valeria Gontareva restore order at the NBU and throughout the banking system. However, these were more likely attempts to install their own people to influence cash flows and NBU decisions. As a result, the newly appointed specialists generally have extensive banking experience and a good understanding of the banking system, but they lack public administration experience. The result is a complete failure of the NBU's management. You can boast and talk about reforms as much as you like, but the fact that a number of Ukraine's largest banks are unable to repay deposits properly is the personal 'accomplishment' of the NBU's management," Okhrimenko believes.
WILL IT GO TO COURT? In early December, lawyer Rostislav Kravets announced that the Pechersky District Court had upheld his claim against the country's top banker and ordered the Kyiv prosecutor's office to conduct a pre-trial investigation into the regulator's actions in August 2014. Furthermore, a corresponding entry must be made in the Unified Register of Pre-Trial Investigations.
In a comment to Segodnya, the lawyer noted that the sharp devaluation of the hryvnia in August seemed suspicious: "In just a few days, the currency appreciated by 3-4%. And under these conditions, the National Bank first sold the currency cheaper, and then, after the appreciation took hold, bought it back for more. This effectively allowed speculators to profit. It's strange to hear about a floating exchange rate when it fluctuates between 3-4% over a period of just a few days. This is impossible in a healthy market economy. Therefore, I believe such actions are illegal. Therefore, I have filed a corresponding complaint with the prosecutor's office." However, as of December 2, the capital's prosecutor's office noted that it had not yet received the Pechersky District Court's decision. As of late December, there is no clear information regarding the progress of this case.
The National Bank's press service noted in early December that they had not received any documents: "The essence of the accusation: the purchase and sale of currency on the interbank market, depending on market conditions, is a direct professional function of the National Bank, and all NBU procedures are strictly regulated.
FORECASTS. Meanwhile, the currency situation in Ukraine remains uncertain – it's possible the national currency will continue to devalue in 2015. As a reminder, in 2014, the hryvnia already saw a halving – from 8 to 16 UAH, as demonstrated by bank exchange rates. Meanwhile, the dollar can be bought on the black market for 18,5-18,8 UAH/USD.
According to Okhrimenko, the hryvnia's devaluation was caused by Kubiv and Gontareva's miscalculations as NBU governors. "Sometimes you get the feeling they simply don't understand how the Ukrainian foreign exchange market works and what needs to be done. For example, in March 2014, Kubiv triggered a hryvnia collapse by senselessly buying up $50 million, and in July, Gontareva stepped on the same rake again, resulting in a collapse. Then, in the fall, Gontareva decided to use a controlled dollar exchange rate, as was done under Arbuzov and Sorkin, but she simply doesn't know how to do it. As a result, Gontareva lost $1,3 billion and failed to stabilize the exchange rate," Okhrimenko lists.
According to him, these mistakes can be compounded by opaque refinancing, absurd currency auctions, and obvious manipulation of temporary administrations: "All of this has led to the Ukrainian banking system now truly being in a state of collapse. Meanwhile, no one knows what the hryvnia exchange rate will be in 2015. But one thing is clear: if Valeria Gontareva continues to head the NBU, the unfortunate experience of 1993-1995, when the coupon-karbovanets depreciated many times over, could be repeated."
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