Ukraine’s ‘No. 1 Reformer’ Says She's Done as Central Bank Chief

  • Gontareva asks president to accept her resignation “soon”
  • Governor says her move comes as she sees her mission completed

Ukraine’s central bank governor, hailed as the “No. 1 reformer” in the country’s struggle to rebuild its war-torn economy, has submitted her resignation.

Valeriya Gontareva told reporters in Kiev on Monday she’d ended her mission, tendering a letter to President Petro Poroshenko saying she was ready to quit. Under Ukrainian law, Poroshenko must accept it and ask parliament to approve it. Gontareva, 52, gave a one-month’s notice, adding that she hoped to be relieved of her job “soon.”

Valeriya Gontareva

Photographer: Vincent Mundy/Bloomberg

Reforms are stalling in Ukraine, an ex-Soviet country that’s trying to turn its economy around after a pro-Russian insurgency and a second democratic revolution in a decade overturned a Kremlin-backed government in 2014. Gontareva curbed inflation from a peak of 60 percent, stabilized the hryvnia and cleaned up a banking sector dominated by oligarch-owned banks by shutting down more than 80 toxic lenders.

“Gontareva has been the No. 1 reformer over the past few years,” Francis Malige, the managing director for Ukraine, Moldova and Belarus at the European Bank for Reconstruction and Development, said by email. “The next stage will be to ensure the resumption of lending, which includes ensuring a level playing field for state-owned and private banks, and to reduce, as much as possible, the role of the state in the banking sector.”

Ukraine’s government bond due 2017 fell to the lowest since April 5, with the yield rising to to 9.067 percent, data compiled by Bloomberg shows. The hryvnia strengthened 0.22 percent to 26.89 per dollar at of 5:05 p.m. in Kiev.

Reforms Needed

Gontareva told Poroshenko in February she intended to quit, citing disappointment that the owners of shuttered lenders and people she’s accused of money laundering have escaped punishment. The IMF has repeatedly delayed tranches in its bailout for Ukraine, saying the government must overhaul the weak judicial system, tackle still rampant corruption and reduce the dominant influence of oligarchs to speed up fragile economic growth.

A change in the central bank’s leadership, and any delay in replacing her, may further jeopardize reform efforts and disbursements from the $17.5 billion IMF-led aid package. Transparency International ranks Ukraine 131 out of 176 countries, alongside Russia, in its 2016 Corruption Perception Index.

The rest of the central bank’s board will remain unchanged, Gontareva said on Monday, as speculation mounted whether her deputies will follow her. The institution’s policies will also remain steady, she said, adding that she’d given a list of possible replacements to Poroshenko. She didn’t elaborate.

Poroshenko will submit a proposal for Gontareva’s successor “once a candidate is agreed on,” the presidential press office said in an emailed statement, without providing details. “Issues of financial system stability, the national currency policy and cooperation with international financial institutions are very important,” the press office said.

Oligarch Threat

During her news conference, Gontareva listed five tycoons, including a lawmaker on parliament’s banking committee, who owe the central bank more than 36.7 billion hryvnia ($1.4 billion). The governor, whose popularity in Ukraine is low, also said she’d received a threat from an oligarch she didn’t name. One of her predecessors, Vadym Hetman, was gunned down in 1998.

Gontareva said she needs time “to overcome” the negativeness she’s been exposed to over the years before she’s able to think about what she’ll do next. Appointed in June 2014, she’s overseen the nationalization of Ukraine’s biggest lender, Privatbank, and the overhaul of the regulator, officially known as the National Bank of Ukraine. The government still needs to inject more cash into Privatbank, she said.  

“I know that if all government institutions conducted their reforms in the same way as the national bank, our country would be at a very different qualitative level in its development today,” Gontareva said. “Now, resistance to changes and reforms will only strengthen.”

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