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Skeptical looks at Ukraine

I.In Ukraine, the central bank is apparently still under political pressure after the replacement of four of its six board members. Deputy chairman Katerina Roschkowa was deprived of responsibility for banking supervision. Her colleague Dmytro Sologub warned on Twitter that this could jeopardize talks with the International Monetary Fund (IMF) about further aid payments under the aid package of 5 billion dollars. Roshkowa had pushed ahead with the controversial banking reform demanded by the IMF. This included not returning the “private bank”, which was saved from collapse with state funds, to its former owner, an oligarch.

How critical international investors think of Ukraine is not only shown by the persistently weak exchange rate of the national currency, the hryvnia (hryvnia). In the previous week, the state energy company Naftogaz unexpectedly canceled the issue of a bond for 500 million euros. It has become clear that “international investors are more and more concerned about the political and operational environment in Ukraine,” said the company, which wanted to pay up to 9.25 percent interest for the bond planned until 2027. Reference was made expressly to the “development of relations with the IMF”. In addition to the independence of the central bank, the latter considers it necessary to strengthen the institutions that take action against corruption. Here, too, observers in the country see things developing for the worse. When the American businessman and former diplomat Amos Hochstein recently left the board of directors of Naftogaz, he called on the government to ensure the independence of the supervisory bodies of state-controlled companies.

The deficit of 6 percent of gross domestic product planned for 2021 in Kiev is also causing financial policy concern. “In view of the 4.6 percent growth expected by the government, the budget deficit is too large,” says Robert Kirchner from the German Advisory Group on Ukraine, which advises the country on behalf of the German government.

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