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Ukraine's central bank governor quits

Ukraine's Central Bank governor Valeria Gontareva has resigned in a blow to reform plans for its battered corruption-plagued economy.

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Ukraine's central bank governor quits

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Ukraine’s Central Bank governor has quit.

Valeria Gontareva’s resignation is a blow to reform plans for the former Soviet country’s battered corruption-plagued economy.

Her tough anti-crisis moves reduced inflation – which at one stage had hit 60 percent – and stabilised the currency, the hryvnia.

They included shutting down half of Ukraine’s lenders and switching to a flexible exchange rate.

But the reforms also brought death threats and a hate campaign and criticism by some lawmakers and local businessmen. In early March a coffin with her face on it was left outside the central bank headquarters.

Gontereva had criticised the government’s failure to prosecute private bank owners she accused of corruption and money laundering.

As she announced her resignation, she alleged that 16 billion hryvnias (562 million euros, $594 million) had been withdrawn from PrivatBank the night before it was taken over by the state, and the bank therefore now needs additional recapitalisation.

Gontereva – a former investment banker and business partner of President Petro Poroshenko – has been praised by investors and the International Monetary Fund, which is propping up Ukraine with billions in bailout loans.

Her resignation weakens the president and his reform efforts.

Warning

Gontareva stressed on Monday that her departure would not change central bank policy or the make up of its board in the near future, and she emphasised the importance of continued cooperation with the IMF to guarantee stability and keep the hryvnia steady.

But she left with a final warning, calling for the central bank to stay independent and told reporters: “I believe that resistance to changes and reforms will grow stronger now.”

Jerome Vacher, the IMF’s representative to Ukraine, said it was critical that her replacement should be of high professional quality and independence.

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Gontareva’s departure reduces further Poroshenko’s allies at a time when international lenders are questioning his ability to follow through on promised reforms.

It nearly completes an exodus of reformers who were appointed after Poroshenko’s pro-Western administration took charge following the Maidan street protests in 2013/2014.

Other reformers who quit or were pushed out include Economy Minister Aivaras Abromavicius and the head of the national police.

Poroshenko’s problems

Glib Vyshlinsky, executive director of the Center for Economic Strategy, said Ukraine faces a difficult future as it has to service nearly $13 billion (12.3 billion euros) of external debt.

“If Gontareva leaves and her post will be taken by someone weaker and more controlled by different interest groups, this will mean that the ability to finance these payments without default and without threats to financial stability will decrease,” he said.

“This will be quite a serious risk for Poroshenko’s re-election in 2019 as well as for gaining control in the parliament.”