Oschadbank Chair reacts to former NBU Chief Hontareva sensational interview

Valeria Hontareva, a former NBU Chair and now a professor at the London School of Economics, is considered the most effective banking sector reformer in Ukraine’s recent history. She fostered cleansing of the market from oligarchic banking during her tenure – thanks to it, now, despite the full-scale war, banks have stayed resilient and continued stable operations. She also contributed to PrivatBank nationalization.

“Valeria Hontareva’s recent interview for NV Business has drawn a lot of attention,” Naumov wrote in his column.

“I could not refrain from joining the discussion.” 

Oschadbank Chair expressed gratitude to Hontareva’s contributions in modern bank system and her cleaning up the banking system.

“Her expertise in macroeconomic and financial stability is unquestionable,” Naumov noted.

“I have to highlight is a certain misunderstanding of the current state of affairs in Ukraine, its economy and financial system, though.”

He cited the NBU ex-head words: “Although the war is even more terrible now, there were difficult moments then (2014-2015).”

“A full-scale war brought much greater challenges for all of us, in my opinion” he said.

“Constant active hostilities, mobilization of millions, demographic crisis caused by mass emigration, significant part of the country under occupation, blackouts, attacks on all oblasts... This list can be continued. The existence of the state itself was at certain points in question. 2014-2015 were not even close to the situation we are experiencing now.”

“Regarding the high discount rate impact on business – It certainly affects the business, but the high cost of the discount rate is far from the biggest problem for Ukrainian business,” Naumov said.

“Personnel shortage due to the key employees’ mobilization is issue number one. Constant blackouts also cause problems. The number of consumers and potential employees is significantly decreasing due to the demographic crisis.”

Naumov also reflected on Hontareva’s thesis about exchange rate liberalization that should have been done in 2022.

“Removing restrictions is easy, but implementing them is difficult,” he said.

“No one would guarantee that as a result, the exchange rate will turn out to be not at UAH 42 per dollar, but, for example, at 60. A similar logic — a sharp rejection of a fixed exchange rate — produced unexpected results for the NBU in 2014-2015. I remember how the then president (Petro Poroshenko) was very dissatisfied with the sharp surge in the exchange rate and demanded that the NBU stop the hryvnia plummeting and keep it at the level of 13 hryvnias per 1 dollar.”

“The NBU’s policy over the past year and a half has been balanced,” Naumov concluded.

NV Business published a long interview with NBU ex-head Valeria Hontareva earlier.