The NBU Awaits a New Head: Will Smolii Pass the Rada's Test?

The NBU Awaits a New Head: Will Smolii Pass the Rada's Test?

The last days of the Seventh Session of the Verkhovna Rada of the eighth convocation were remembered not only for the passage of an important law on the de-occupation of Donbas, but also for preparations for an equally important personnel appointment that has been talked about for months. Specifically, this concerns two resolutions that Petro Poroshenko 18 submitted to parliament in February. The first — to dismiss Valeriya Hontareva from the post of head of the National Bank. The second — to appoint Yakiv Smolii to that post.

56-year-old Yakiv Vasyliovych has been acting head of the NBU since 11 May 2017 — the first day Valeriya Hontareva did not come to work, after she 10 in April submitted her resignation. Before becoming acting head, Smolii worked for seven months as Hontareva’s first deputy. He has worked at the National Bank since April 2014.

As soon as it became known that Poroshenko had submitted the “personnel” resolutions to the Rada, the NBU press service hastily announced that Smolii was ready to lead the banking-system regulator on a permanent basis. But does Yakiv Vasyliovych have a chance to become the eleventh head of the NBU? INFORMATOR tried to find answers to that and other questions.

IMF Pressure or Reputation Salvage?

Why did Poroshenko, after eight months of “silence,” decide to appoint a new head of the NBU? Head of the Committee of Economists of Ukraine Andriy Novak believes the reason is the IMF.

“Ukraine did not receive the next tranche before the New Year, despite much talk about it. To provide the money, the Fund set a number of conditions. One of them was appointing a new head of the National Bank so that Ukraine would have a full signatory to the loan agreement,” the economist said.

The president of the Ukrainian Analytical Center, Oleksandr Okhrimenko, strongly disagreed with Novak. He believes that appointing the head of the NBU cannot have been one of the IMF’s conditions for providing a loan, since the Fund suspended its assistance program over Ukraine’s failure to implement the Minsk agreements, and not because the banking regulator lacked a full-time head.

Political scientist Kyrylo Molchanov is convinced that Poroshenko did not intend to dismiss Hontareva and therefore did not plan to appoint Smolii; rather, he acted because of force majeure circumstances.

“The reason (for submitting the resolutions to the Rada, — ed.) was an investigation by the Qatari TV channel Al Jazeera, in which Hontareva’s name appeared; according to the publication, she allegedly facilitated the transfer abroad of 1,5 billion dollars of the so-called ‘Yanukovych funds.’ Therefore the president needed to quickly send her into resignation so the scandal around her would not damage his image,” the political scientist said.

The Rada Is No Obstacle

Experts are confident: Yakiv Smolii’s candidacy will be supported by the parliamentary majority, and he will become the eleventh head of the National Bank of Ukraine.

“There will be no problems appointing Smolii. His candidacy has been discussed for a long time, and if the president submitted it to parliament, he probably already had some solid agreements that it would pass the vote in the chamber without obstacles,” Molchanov said.

Okhrimenko is also convinced that the Rada will support Smolii’s appointment as head of the NBU, since “this is more a political than an economic question.”

He believes that Poroshenko will most likely promise the People’s Front that Smolii’s deputy will be a Yatsenyuk ally, and the president will “buy” any remaining votes he lacks.

New Head — Old Practices

“The surname of the person who will take the post of NBU head is not so important. Much more important is that the policy pursued by the NBU changes. If the new head publicly declares that the National Bank will take a course toward stabilizing the hryvnia exchange rate, the market reaction will follow and currency speculation will stop,” Novak believes.

At the same time, the economist is not very confident that Smolii will change NBU policy after the Rada vote.

“So far the acting head of the NBU is implementing the same policy that was in place under Hontareva. The chances that anything will change are very small, because Smolii is a deeply pro-presidential person,” he said.

Like Novak, Molchanov does not expect the National Bank to start working “in a new way” under Smolii’s leadership.

“While Hontareva is on leave, Smolii has been performing the duties of NBU head for the past seven months. In effect, he has long since taken on the leadership of the National Bank. He continues the same policy as Hontareva. Therefore I would not expect effective management from Smolii. I think that after his appointment a sluggish devaluation of the hryvnia will continue,” the political scientist suggested.

With greater optimism about Smolii’s appointment is Okhrimenko. The economist is convinced that Hontareva’s successor will be able to stabilize the hryvnia and revive the banking system.

“Smolii is a more or less predictable and understandable person. There is hope that he will revive the banking system. Not immediately, but he will revive it,” he offered optimistically.

Recall that NBU head Valeriya Hontareva declared tens of millions of hryvnias received from the sale of securities.

Maryan Oshchanovskyi

for INFORMATOR