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EBA urges to adopt a Draft Law on the non-return of banks

11/ 04/ 2020
  Business urges the Verkhovna Rada at the next meeting to make an important step furthering the implementation of a new program of cooperation with the IMF, as well as to receive additional assistance to overcome the consequences of the coronavirus pandemic. In particular, this involves the adoption of a draft law on the non-return of banks to ex-owners. At the same time, it is important for the country to adopt a draft law on changes to the state budget for 2020. According to preliminary information, the next meeting of the Verkhovna Rada should be held this Monday, April 13. Anna Derevyanko. EBA Executive Director. We understand the fuss happening around the bank draft law, and it is indicative that more than 16,000 amendments to it have been made. However, we hope that the people′s deputies will take action and make a decisive step towards cooperation with the IMF. After all, without the support of the IMF and other international organizations, we will have to resort to very painful methods to close the budget gaps, for example, dramatically raising taxes, reducing budget expenditures, money emission, etc. Leading experts predict that in case of the prolongation of the quarantine period to several months and the approved IMF the program, Ukraine’s GDP will fall by 9% in 2020, and the hryvnia exchange rate may reach 35 UAH / USD. Without the support of the IMF, the hryvnia devaluation could reach 45-65% of the current level, up to 50-80 UAH / USD.  In order to stabilize the exchange rate, it will be necessary to impose tight currency restrictions that will exacerbate the crisis. Depreciation of the hryvnia will lead to an increase in inflation of 20-50% and a fall in real income of the population by at least 30%, etc. So, hopefully, next week we will be able to put an end to these pressing issues. It is worth reminding that the bank draft law №2571-d was approved by deputies in the first reading on March 30. Its adoption will guarantee the inevitability of withdrawing banks out of the market, change the procedure for appealing against decisions of the regulator and other authorized bodies in the process of withdrawing banks, clearly define the prerequisites and procedure for obtaining compensation from former owners, improve the decision-making procedure of the National Bank. The draft law on changes to the state budget for 2020 implies, in particular, the redistribution of funds for the creation of a stabilization fund to fight the coronavirus and its economic impact. It is a newly added IMFs requirement as the expenditures for overcoming the medical and economic consequences of COVID-19 could not have been provided in the current budget.

Business urges the Verkhovna Rada at the next meeting to make an important step furthering the implementation of a new program of cooperation with the IMF, as well as to receive additional assistance to overcome the consequences of the coronavirus pandemic. In particular, this involves the adoption of a draft law on the non-return of banks to ex-owners. At the same time, it is important for the country to adopt a draft law on changes to the state budget for 2020. According to preliminary information, the next meeting of the Verkhovna Rada should be held this Monday, April 13.

Anna Derevyanko EBA Executive Director
We understand the fuss happening around the bank draft law, and it is indicative that more than 16,000 amendments to it have been made. However, we hope that the people′s deputies will take action and make a decisive step towards cooperation with the IMF. After all, without the support of the IMF and other international organizations, we will have to resort to very painful methods to close the budget gaps, for example, dramatically raising taxes, reducing budget expenditures, money emission, etc.

Leading experts predict that in case of the prolongation of the quarantine period to several months and the approved IMF the program, Ukraine’s GDP will fall by 9% in 2020, and the hryvnia exchange rate may reach 35 UAH / USD. Without the support of the IMF, the hryvnia devaluation could reach 45-65% of the current level, up to 50-80 UAH / USD.  In order to stabilize the exchange rate, it will be necessary to impose tight currency restrictions that will exacerbate the crisis. Depreciation of the hryvnia will lead to an increase in inflation of 20-50% and a fall in real income of the population by at least 30%, etc.

So, hopefully, next week we will be able to put an end to these pressing issues.

It is worth reminding that the bank draft law №2571-d was approved by deputies in the first reading on March 30. Its adoption will guarantee the inevitability of withdrawing banks out of the market, change the procedure for appealing against decisions of the regulator and other authorized bodies in the process of withdrawing banks, clearly define the prerequisites and procedure for obtaining compensation from former owners, improve the decision-making procedure of the National Bank.

The draft law on changes to the state budget for 2020 implies, in particular, the redistribution of funds for the creation of a stabilization fund to fight the coronavirus and its economic impact. It is a newly added IMF’s requirement as the expenditures for overcoming the medical and economic consequences of COVID-19 could not have been provided in the current budget.

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