Business met with the Board of the NBU

12/ 05/ 2023

Today, a meeting was held at the European Business Association with the Board of the National Bank of Ukraine - the Governor of the NBU, Andrii Pyshnyi, and his deputies, Serhii Nikolaichuk, Yurii Heletii, and Dmytro Oliinyk. The discussion focused on the regulators macroeconomic forecasts, the foundations and plans for economic recovery, and the central banks further policies, particularly in the context of currency liberalization. The logic that the NBU implements in its policy is defined by the framework of obligations with the IMF, so it is worth taking a closer look at this document, as this strategy will be implemented over the next few years. In particular, special attention is paid there to administrative and currency restrictions, cross-border transfers, and the like. The National Bank understands that currency restrictions serve a purpose but gradually lose their function as the macroeconomic situation in the country stabilizes. Therefore, there is a need to develop a Strategy for Currency Liberalization, and the regulator is actively working on it. The strategy will be built as a phased plan and implemented as the necessary prerequisites are formed, without being tied to specific time frames. The program will also be discussed with the IMF, particularly during the Funds mission at the end of May. At the same time, representatives of the NBU assured businesses that there would be no delays from the regulator and that the strategy would be implemented step by step as the corresponding conditions arise. Positive trends are already noticeable thanks, in particular, to the NBUs balanced and consistent policy. For example, inflation decreased to 17.9% in April, there has been no monetary financing of the budget since the beginning of the year, the cash exchange rate is strengthening, demand for currency is stabilizing, and the volume of NBUs foreign exchange interventions is decreasing. At the same time, thanks to donor assistance, Ukraines gold and foreign exchange reserves are now at their highest level in the last 11 years. Strengthening measures of financial monitoring for the gambling industry helped reduce demand for currency generated by illegal businesses and significantly fill the budget (taxes paid in March were almost twice as much as for the whole of last year). If we talk about plans and forecasts, specifically, a reduction in the discount rate to 21% is expected in the IV quarter of this year. Also, lifting restrictions on the use of corporate payment cards, providing bank guarantees for companies to participate in tenders for the restoration of Ukraine, and similar measures are among the top priorities. The following steps in the strategy include discussing possibilities to ease restrictions on cross-border transfers, payments of interest on Eurobonds, etc. At the end of the meeting, the Board of the National Bank of Ukraine noted that the regulator is a supporter of market principles and will do everything possible to return the economy to market regulation. However, these steps must be moderate and maximally aimed at ensuring macro-financial stability and sustainability. Therefore, on behalf of the European Business Association, we sincerely thank the National Bank for the meeting. We have agreed to hold such discussions regularly, which is undoubtedly crucial and valuable for entrepreneurs.

Today, a meeting was held at the European Business Association with the Board of the National Bank of Ukraine – the Governor of the NBU, Andrii Pyshnyi, and his deputies, Serhii Nikolaichuk, Yurii Heletii, and Dmytro Oliinyk. The discussion focused on the regulator’s macroeconomic forecasts, the foundations and plans for economic recovery, and the central bank’s further policies, particularly in the context of currency liberalization.

The logic that the NBU implements in its policy is defined by the framework of obligations with the IMF, so it is worth taking a closer look at this document, as this strategy will be implemented over the next few years. In particular, special attention is paid there to administrative and currency restrictions, cross-border transfers, and the like.

The National Bank understands that currency restrictions serve a purpose but gradually lose their function as the macroeconomic situation in the country stabilizes. Therefore, there is a need to develop a Strategy for Currency Liberalization, and the regulator is actively working on it. The strategy will be built as a phased plan and implemented as the necessary prerequisites are formed, without being tied to specific time frames. The program will also be discussed with the IMF, particularly during the Fund’s mission at the end of May.

At the same time, representatives of the NBU assured businesses that there would be no delays from the regulator and that the strategy would be implemented step by step as the corresponding conditions arise. Positive trends are already noticeable thanks, in particular, to the NBU’s balanced and consistent policy. For example, inflation decreased to 17.9% in April, there has been no monetary financing of the budget since the beginning of the year, the cash exchange rate is strengthening, demand for currency is stabilizing, and the volume of NBU’s foreign exchange interventions is decreasing. At the same time, thanks to donor assistance, Ukraine’s gold and foreign exchange reserves are now at their highest level in the last 11 years. Strengthening measures of financial monitoring for the gambling industry helped reduce demand for currency generated by illegal businesses and significantly fill the budget (taxes paid in March were almost twice as much as for the whole of last year).

If we talk about plans and forecasts, specifically, a reduction in the discount rate to 21% is expected in the IV quarter of this year. Also, lifting restrictions on the use of corporate payment cards, providing bank guarantees for companies to participate in tenders for the restoration of Ukraine, and similar measures are among the top priorities. The following steps in the strategy include discussing possibilities to ease restrictions on cross-border transfers, payments of interest on Eurobonds, etc.

At the end of the meeting, the Board of the National Bank of Ukraine noted that the regulator is a supporter of market principles and will do everything possible to return the economy to market regulation. However, these steps must be moderate and maximally aimed at ensuring macro-financial stability and sustainability.

Therefore, on behalf of the European Business Association, we sincerely thank the National Bank for the meeting. We have agreed to hold such discussions regularly, which is undoubtedly crucial and valuable for entrepreneurs.