Ukraine needs a Development Bank to drive down the cost of lending to infrastructure, says Rybalka

According to the head of the parliamentary committee, it is necessary to carefully prepare the basis for the establishment of the Development Bank and approve the strategy
of state-owned banks
Date: February 7, 2017

The Verkhovna Rada Committee on Financial Policy and Banking Activity will prepare a legislative basis for mobilizing additional lending resources in Ukraine, including through the specialization of the state-owned banks. This was the major topic of Serhi Rybalka's interview with the newspaper "Day" published on Tuesday.

Mr. Rybalka believes that it is necessary to carefully prepare the basis for the creation of the Development Bank and approve the strategy of state-owned banks. "Logically, the export should be jurisdiction of the Ukreximbank and lending to domestic investments in high-tech production and infrastructure at lower cost should be the responsibility of the Development Bank." We need to do all it takes for the state banks to start providing cheap lending to small and medium-sized businesses," Mr. Rybalka said.

"After the nationalization of PrivatBank, the share of assets held by state-owned banks in the banking system reached 53%. I think most of the functions that can be performed by ordinary commercial banks should be left to private institutions by selling them the relevant assets." State-owned banks do not have to compete with private banks. Their function is to implement the state policy, help to achieve our strategic goals, transform the Ukrainian economy into a strong, sustainable and dynamically developing economy," the head of the Committee said.

He highlighted the fact that this position is also shared by the financial experts from Japan, with whom the Committee is currently consulting. "We will hand over all our proposals and suggestions to the government and will take an active part in the development of the country's medium-term development program," Rybalka said.

"We want that the government recognizes the importance of creating a system of incentives to promote the Ukrainian technological exports in the world markets and do everything we can do to make it happen. We have backed up the adoption in the Parliament of a law sponsored by key people in the Oleg Lyashko's Radical Party. Now this law needs to be implemented; the foreign buyers of our products must be provided with low-interest loans, and critical export contracts be supported with insurance tools and guarantees," Mr. Rybalka said.

According to MP, these measures will increase the share of products with acceptable added value in the overall export, redouble the inflow of hard currency, create new production and jobs and improve the welfare of citizens. "We have to choose between keeping up trading in unprocessed metal and round timber and becoming poorer by the day or building a strong industry and selling abroad complex machines, robots, planes and space rocket carriers. We will certainly submit our proposals to the medium-term plan of the government, the draft of which was recently presented by Prime Minister Vladimir Groisman," he stressed.

Earlier the Rada Finance Committee has approved and recommended for implementation the Government's Strategy for the Development of the Banking Sector until 2020. The document was developed by a joint effort of leading experts, scientists, former heads of profile NBU departments and representatives of the banking community. Based on the Strategy, the Committee has developed a number of draft laws, including on improving the NBU transparency, reforming the deposit guarantee system and stimulating lending to the economy.

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