Thursday 25 / April / 2024
Kiev: Ukraine's central bank governor, Valeria Gontareva, resigned on Monday, depriving the country of a tough reformer capable of taking on vested interests at a time when the economy is just recovering from a steep recession.
She warned at a news conference that resistance to change would now increase.
The resignation -- effective on May 10 if it is accepted by the president -- comes a week after the International Monetary Fund, which supports Ukraine with a $17.5 billion bailout package, said domestic politics could derail crucial reforms such as raising the pension age and lifting a ban on land sales.
Praised by investors and the IMF, Gontareva's tough anti-crisis measures saw her vilified by some lawmakers and local businessmen. A hate campaign against her included a protester leaving a coffin at her door.
The former investment banker and business partner of President Petro Poroshenko took charge nearly three years ago after Russia's annexation of Crimea and with Ukraine in the throes of a pro-Russian separatist uprising.
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 shot, calling for the central bank to stay independent and told reporters: "I believe that resistance to changes and reforms will grow stronger now."
Her departure leaves Poroshenko with one fewer ally in power at a time when lenders already question 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.
Gontareva introduced sweeping reforms, including shutting down half Ukraine's lenders and switching to a flexible exchange rate. Economic growth is expected to be 2 per cent this year, according to the IMF's forecast.
As if to underline the kind of conflicts in store for her successor, around 100 protesters gathered at the Kiev headquarters of the Russian-owned Sberbank on Monday, demanding the bank be shut down, a Reuters witness said.
Accused of being a Russian stooge, Gontareva had called for the protesters to end a campaign to vandalise and obstruct the work of Kremlin-owned lenders, warning of the threat to financial stability.
One of her biggest reforms was nationalising PrivatBank, an oligarch-owned lender of systemic importance which she said lent all its corporate loans to parties related to its owners. On Monday, she alleged that 16 billion hryvnias ($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.
Glib Vyshlinsky, executive director of the Center for Economic Strategy, said Ukraine faces a difficult future as it has to service nearly $13 billion 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."
The office of Poroshenko, who is responsible for choosing and dismissing the governor, declined immediate comment.
"She has been guiding the Ukrainian economy fairly well over these extremely challenging times, so I think this would be read negatively by the market. Of course we have to see who will be the replacement," said Jakob Christensen, head of emerging markets research, Danske Bank.
The hyrvnia curency was steady on Monday.
Gontareva had signalled in March that she would quit after the IMF dispersed its latest tranche of aid.
"Yesterday there was a coffin with my head in it at the main entrance of the central bank," she told journalists on March 2. "If the whole country sees that as normal, then that's that."
