Date: April 18, 2016
The Verkhovna Rada Committee on Financial Policy and Banking presented a Draft Strategy for the Development of the Ukrainian Banking System for 2016-2020, which is intended to overcome the economic crisis, strengthen stability of the national currency and the banking system, and ensure sustainable economic growth.
During the presentation of the document, the committee head Serhiy Rybalka highlighted the fact that the draft strategy was developed with the assistance of the monetary, currency and banking regulation professional experts as well as public organizations, the scientific, expert and banking community.
"In the past 2 years, the Government and the National Bank have failed to show how they intend to reach the strategic goals: capturing the accelerated economic growth and promoting radical changes in the structure of the national economy. I do not see a system of long-term measures that would allow our economy to start moving away from being exclusively focused on raw materials. The efforts we have seen so far were mostly focused on introducing deregulation, fighting corruption or reducing the budget deficit, which is clearly not enough. Only if we build our own high-tech industry, we will be able to make the Ukrainians wealthy," he said.
According to the Committee head, Ukraine needs a system of the credit, tax, infrastructure and other stimuli that will reboot the economy. In particular, such measures must include intensifying lending of the export-oriented industries, and favoring the production of finished products over the traditional raw materials exports. We want that over time Ukraine ceases to be only an exporter of ore, roundwood or grain and steadily regains the once forfeited positions in machine-building exports.
Also Mr. Rybalka highlighted the absence of key goals such as remodeling the structure of the national economy in the existing Financial Sector Development Program until 2020 and the fact that the principles declared in it are not implemented. "Although the document declares such measures as stimulation of competition and ensuring the equality of financial sector participants, the NBU policy to reduce the number of banks and wipe out the small banking institutions runs counter to these declarations. The adherence to another declared principle: promoting trust between financial sector participants and regulators also remains lip service as the bankers complain to our committee about the National Bank's actions," he said.
In conclusion, the committee's chair informed his readers that the draft strategy was posted on the committee's website and in his Facebook page, and urged them to send their comments and suggestions to work out – along with a wide range of experts - the system proposals for reforming the industry for submittal to the Verkhovna Rada for review and approval. "Our goal is to continue the public discussion and adopt specific programs and draft laws," the deputy concluded.
According to the text of the draft strategy, it prioritizes the high-tech industrialization of Ukraine, outlines the bank lending activities, promotes stabilization of the exchange rate as an anchor to drive down inflation, proposes to introduce a moratorium on the administratively driven growth of prices and tariffs, suggests transformation of state banks into drivers of economic growth, proposes to attract the foreign capital only within the framework of national economic policy and to increase the effectiveness of the international assistance.
The other objectives proclaimed in the strategy include: improving the quality of the National Bank's policies, increasing confidence to the regulator, the banking system and the national currency as well as developing a civilized competitive market for banking services and advancing the lending sector of the real economy sectors.
To implement these objectives, according to the document, it is necessary to speed up the appointment of the National Bank of Ukraine's Board and to prepare a number of modifications to the banking legislation, such as finalize the law "On the National Bank of Ukraine", develop the legislation on bank lending and currency regulation, provide to the banks systematic support for reducing the ratio of problem assets, and effectively restructure the non-performing loans nominated in foreign currencies for citizens and businesses.