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KIEV, Ukraine – The International Monetary Fund (IMF) and the international business community expressed deep concern on Thursday, July 2, after the governor of Ukraine’s central bank resigned citing political pressure.
The bank chief Yakiv Smoliy stood down on Wednesday, July 1, saying “systematic political pressure” made it “impossible” for him to fulfill his duties.
The IMF praised Smoliy’s leadership of the National Bank of Ukraine (NBU) in a statement, stressing the need to preserve its independence.
“The independence of the NBU is at the center of Ukraine’s Fund-supported program,” on which the country depends on for crucial financial aid, and “must be maintained under his successor,” the IMF said.
The European Union said Smoliy’s resignation “against the backdrop of alleged political pressure sends a worrying signal.”
It said compromising the central bank’s independence “jeopardizes the credibility of and support for Ukraine’s reform agenda.”
The post-Soviet country’s western business community also voiced alarm at the move.
The European Business Association said in a statement that it was “deeply concerned.”
Smoliy’s resignation sends “a negative signal to foreign investors and companies operating in Ukraine,” suggesting “security, justice, and equality now can be put under question,” it said.
The president of the American Chamber of Commerce, Andy Hunder, tweeted that Smoliy was “hugely respected among the business community.”
“Businesses are now concerned about the future independence of the @NBUkraine management and the continuation of the @IMFNews program,” he wrote.
‘Red line for investors’
Following Smoliy’s resignation, Ukraine’s finance ministry canceled a previously announced Eurobond offering.
Tomas Fiala, the Czech chief executive officer of Kiev-based investment company Dragon Capital, in a statement on Thursday said Smoliy’s departure was a “red line for all investors,” accusing the authorities of “complete incompetence.”
Timothy Ash, a London-based economist and Ukraine expert, tweeted on Wednesday evening that Smoliy’s resignation was “terrible news for Ukraine.”
“The future of the IMF program must be in doubt,” he said.
The bank leadership had come under attack from a group of lawmakers, mainly MPs from the ruling party of President Volodymyr Zelensky who are considered close to oligarch Igor Kolomoisky.
In a draft resolution, the lawmakers accused the bank of overseeing policies that were “dangerous for the country” and worsened its economic crisis.
“Zelensky failed to adequately support the independence of the NBU due to an onslaught from Kolomoisky and his supporters,” said Ash.
In June, the IMF unblocked $2.1 billion worth of aid under a new $5-billion plan to help Ukraine.
Zelensky’s office said in a statement that ensuring the NBU’s independence remains its “unconditional priority.”
Zelensky has accepted Smoliy’s resignation which now needs approval from parliament, which is expected on Friday, July 3. – Rappler.com