#BREAKING NEWS🚨🚨
#UKRAINE #KIEV #BANKRUPCY
Ukrainian central bank governor Yakov Smoly surprisingly resigned amid an ongoing issue of a $ 1.75 billion government bond. Ukraine is now threatened with state bankruptcy again.
#UKRAINE #KIEV #BANKRUPCY
Ukrainian central bank governor Yakov Smoly surprisingly resigned amid an ongoing issue of a $ 1.75 billion government bond. Ukraine is now threatened with state bankruptcy again.
Because the country urgently has to ensure its solvency through billions of foreign bonds. Old $ 17 billion expiring Ukraine bonds will need to be refinanced this year alone.
On Thursday, the Ukrainian central bank NBU launched an offer to subscribe to a twelve-year, 7.3 to 7.4 percent yielding Eurobond through the investment banks Goldman Sachs and JP Morgan. The bond was to be listed on the London Stock Exchange on July 8th.
This project was abruptly stopped after Smolij's resignation, which according to investors came “out of the blue”. After the hard decline in economic output after the Russian annexation of the Ukrainian peninsula of Crimea and the Moscow-supported war in eastern Ukraine in 2014,
Ukraine was only able to survive financially thanks to aid from the International Monetary Fund (IMF). In the middle of the corona crisis, the IMF was once again helping Ukraine with a billion-dollar program.
It is only thanks to this standby stabilization credit facility that Ukraine can issue much-needed government loans and bonds.
According to analysts, Smolij's decision to leave is a slap in the face of young President Wolodimir Selenski and a vote of no confidence in his reform agenda. After the resignation, commentators in Kiev speculate that the central bank will remain independent -
which is a prerequisite for the continued existence of the agreement with the IMF. The independence of the central bank had been repeatedly written into the new standby agreement (SBA) of June 9 by the IMF. Selenski's "Servants of the People" party,
which has an absolute majority in parliament, is now attacking it with a legislative initiative. There have always been rumors that Selenski wants a more loyal governor who is less committed to market principles of stability, wrote Ukraine expert Timothy Ash,
senior sovereign strategist at BlueBay Asset Management in London. And he called Smolij's resignation “a major blow to Ukraine and a great risk to macro-financial stability; it also jeopardizes the future of banking sector reform in Ukraine - against people like Kolomoiski ”.
Smolij has resigned because Ukrainian banking oligarch Ihor Kolomojski is said to have put massive pressure on him. "For a long time, systematic political pressure was exerted on the central bank," Smolij explained.
He wanted "that my resignation is a warning against further attempts to undermine the institutional basis of the central bank in Ukraine," added Smolij. "Guaranteeing the independence of the central bank remains our priority,"
said the office of Ukrainian President Volodimir Selenski after Smolij's departure became known. Smolij, who came into office in 2018, is not the only central bank chief in the country who felt exposed to massive pressure: Smolij's predecessor as central bank chief,
Natalja Gontarewa, accuses Kolomojski, the former owner of the country's largest financial institution, the now nationalized private bank, before being behind her assassination attempts. "I was afraid for my life and my family said: Enough of it,"
said Gontarewa after physical attacks during her flight in London and arson attacks in Kiev. The NBU branded attacks on its employees as a "terror campaign" and named Kolomojski as the person responsible. Kolomojski,
a former friend of Selenski and head of the channel for today's head of state's successful comic TV program, suffered a humiliating defeat when Rada - the Ukrainian parliament - passed the so-called Anti-Kolomoiski Banking Act on May 13.
This prohibits the state from returning a bank to its previous owner once it has been nationalized. The law was a precondition for agreeing a standby loan agreement with the IMF.
Kolomojski's private bank was nationalized in 2016 after a $ 5.5 billion hole was discovered in its balance sheet. Kolomojski and his business partners are said to have put the money aside through inside loans. He denies that. In London,
he froze $ 2 billion in assets ahead of a lawsuit. Gontareva had started the NBU's purging work in the banking sector, which Smolij later continued. The sector dominated by oligarchs was brought back into the profit zone, a mountain of bad loans (NLPs) was detoxified.
The NBU has also pursued a conservative and prudent monetary policy that has stabilized the local currency, the hryvnia, and has managed to lower inflation from over 60 percent in 2016 to 1.7 percent in May. "
The NBU was a bastion of reform and was one of the few competent and progressive bodies in Ukraine to gain recognition among international donors and investors in Ukraine," said Ben Aris, an expert on Eastern Europe from Business New Europe.
It is known that the NBU team "has been under great personal and professional pressure (including death threats) and professional pressure since Euromaidan and the bank began cleaning up the banking system, which was a mine of oligarchs, criminals and money launderers".
The hryvnia rate has fallen again since Smolij's resignation.
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