Keynote Speech — Valeria Gontareva, NBU Governor. 12th Annual Ukraine Investor Conference
14.03.2016
Below please find highlights from the keynote speech delivered by Valeria Gontareva, NBU Governor
Dragon Capital held its 12th Annual Ukraine Investor Conference on March 10-11 in Kyiv. The event gathered close to 300 guests—more than 100 international investors, local investors as well as top management of leading Ukrainian companies, who took the opportunity to gain fresh insights into the economic and political situation in Ukraine and communicate directly with government officials, representatives of international financial institutions and the country’s largest companies in order to make investment decisions.
Below please find highlights from the keynote speech delivered by Valeria Gontareva, NBU Governor.
Recent progress
- Reforms conducted by the NBU were one of the few successful ones in Ukraine. Macro stability has been achieved, as reflected by three consecutive quarters of real GDP growth, a virtually balanced C/A (0.2% of GDP deficit in 2015) and accumulation of official reserves (up 77% y-o-y to $13.3bn at end-2015).
- The NBU is undergoing significant internal restructuring. Around 60% of its staff has been laid off, generating UAH 5.6bn in savings over the past two years, and 41 projects were launched to optimize internal processes.
- As part of banking sector reform, two asset quality reviews with stress tests were completed: for the top-35 banks in 2014 and top-20 banks in 2015. This year the NBU plans to diagnose the next 40 banks. Following the NBU’s cleanup effort, the total number of banks fell to 120 from 180, with 85 of them collectively accounting for a mere 5% of total banking assets. The NBU mandated banks to disclose their ownership structure, which resulted in 98% of the banking system becoming transparent.
Plans for future
- The first stage of banking system reform has been completed, the two other stages being “reloading” (being delayed due to IMF financing remaining on hold) and return to sustainable growth.
- The NBU aims at setting up a level playing field for all banks, including stateowned ones. Together with the Finance Ministry, a strategy for the state banks has been developed, including plans to sell stakes to the EBRD, IFC or other IFIs.
- This year the NBU will transition to a new monetary policy regime, inflation targeting. The Bank forecasts end-2016 inflation at 12%. The prerequisite for this policy to succeed is “zero fiscal dominance”, which could be achieved if Naftogaz and DGF no longer required recapitalization.