Ukrainian Central Bank Governor’s Future in Doubt as Rumors Grow

  • Possible Gontareva resignation denied by bank’s press office
  • Ex-Premier Yatsenyuk not interested in job, party ally says

Speculation grew that Ukraine’s central bank governor is preparing to step down, a move that could stall the momentum of economic reforms and further delay transfers from a $17.5 billion international bailout.

Valeriya Gontareva has told President Petro Poroshenko and International Monetary Fund chief Christine Lagarde about her plans to resign, the Dzerkalo Tyzhnya newspaper reported Feb. 25, without saying where it got the information. Ex-Prime Minister Arseniy Yatsenyuk was offered the job, but isn’t interested, a party ally said Monday, declining to say who made the approach. The central bank’s press office denied the governor has announced her intention to quit.

Gontareva, 52, helped stem a plunge in Ukraine’s currency and rebuild foreign reserves as a second revolution in 10 years and fighting with Russia-backed insurgents ravaged the ex-Soviet economy. While some reforms to align Ukraine with the European Union have become bogged down as they threaten vested interests, the central bank has won praise from foreign investors for its endeavors, including smoothing IMF disbursements.

Ukraine’s latest $1 billion tranche from the Washington-based lender has been delayed since November and risks further postponement in the event of a leadership change at the central bank, according to Oleksandr Parashchiy, head of research at the Concorde Capital investment company in Ukraine’s capital, Kiev.

‘Cause Instability’

“The possible rotation of the central bank’s head ahead of a possible signing of the latest IMF memorandum in the coming weeks doesn’t look optimal for Ukraine as it would cause instability and delays,” he said. “It’s possible Gontareva will be allowed to leave, but in exchange for remaining for the next three months.”

Gontareva allowed the hryvnia to float freely, brought inflation down from more than 60 percent and cleaned up the financial system by shutting down banks that served the needs of oligarch owners. In December, she oversaw the nationalization of the country’s No. 1 lender, Privatbank.

Selected by Poroshenko in June 2014, Gontareva is less than halfway through her seven-year term. Under Ukrainian legislation, the president nominates central bank governors and parliament must approve them.