Date: June 12, 2017
The Head of the Head of the Verkhovna Rada Committee on Financial Policy and Banking Mr. Rybalka told how he thinks the state should support the economy
When the industrial production is plummeting and real lending is all but non-existent, the state should "shoulder" the burden of the financial system.
This is what the Head of the Verkhovna Rada Committee on Financial Policy and Banking Serhiy Rybalka wrote about in his blog in the Observer.
He mentioned four particular areas where the state should intervene to "pull the country from the abyss of poverty."
First of all, Mr. Rybalka said, it is necessary to help banks getting rid of non-performing loans. "According to the official National Bank statistics, the level of non-performing loans has already exceeded 55 percent. We support the Ministry of Finance that proposes to start dealing with the high risk assets of the state-owned banks but we must help all financial institutions," the head of the Rada Finance Committee highlighted.
Mr. Rybalka believes that the state banks should be used as tools to promote reforms. "The Ministry of Finance, along with the National Bank, has acquired an unprecedented influence on banks. If they implement a coordinated policy in 2-3 years of the transition period, they can stimulate people to return to the banks, significantly increase the level of non-cash payments and gradually reduce lending rates. But only if they use smart incentives and convenient services instead of bans and pressure," the MP wrote.
In his perspective, people should feel comfortable about declaring their income and paying taxes in banks. "I think this is the jurisdiction of the Ministry of Finance who must cooperate with the tax, customs and other authorities. The private banks will have to follow suit. Eventually, the state banks will bring down the cost of non-cash transactions dramatically," S. Rybalka said.
The head of the Rada Committee is confident that the state banks should be also used as tools for development.
"We support the idea of improving the level of corporate governance in state-owned banks. But this tool will be useless if we fail to set the right goals." The main strategic objective of state banks should be to bolster economic growth and change the structure of the national economy through cheap lending of Ukrainian enterprises that have achieved a sufficiently high technological level and provide added value", S. Rybalka stressed.
He also added that the National Bank should reduce transactions with deposit certificates to adjust the monetary policy on a national level. "Just in one day of May 25 this year the National Bank sold to the banks the UAH 10 billion worth of deposit certificates. This was a sweeping operation that involved 46 banks or nearly half of the still sound banking institutions," the MP said. In his opinion, such practices become a stumbling block to the banks that otherwise would be willing to credit the corporate sector.
"Foreign exchange policy should also stimulate our exporters that have a proven record of delivering high added value, substituting imports and promoting production in Ukraine," S. Rybalka pointed out.
He has called on the parliament, the government and the new National Bank leadership "to work hand in hand toward finding common ground, smoothing out different opinions and elaborating a joint action plan for pulling the country out of the abyss of poverty."
"Our joint efforts should be reflected in the draft Fundamentals of Monetary Policy for 2018, in the modernized financial and banking sector development strategy, in the NBU's everyday actions and, if necessary, in specific bills that we will work out together. We, as a committee, are ready to become a platform for this professional discussion,"- S. Rybalka summarized.