Majority Being Taught a Lesson
Volodymyr Stelmakh, Governor of the National Bank of Ukraine, filed his resignation with the president, Speaker Volodymyr Lytvyn said yesterday. The head of state approved the resignation and recommended that Verkhovna Rada consider Serhiy Tyhypko (leader of the Labor Ukraine — Party of Ukrainian Industrialists and Entrepreneurs faction) as Mr. Stelmakh’s replacement. The candidacy might be put to the vote as early as Thursday.
Only ten days ago, Volodymyr Stelmakh declared that he would not resign his post as head of the NBU, but certain efforts must have been made in certain quarters since then, and he changed his mind in the end. He also described the attempt, by certain factions of the lawmaking majority, to have him replaced by Serhiy Tyhypko as a political provocation, stressing that “a man running commercial banks cannot head the National Bank.” Some sources point to Tyhypko’s involvement with TAS-Komertsbank (formerly known as Kyiv Privat) and TAS-Investbank (former Societe Generale-Ukraine), although the people’s deputy declines comment.
In the first half of the day on the foreign exchange market, demand for US dollars exceeded the supply, tending to lower the UAH exchange rate, but in a situation like this the NBU traditionally steps in toward closing time using its currency reserve. By and large, the market responded nervously to Volodymyr Stelmakh’s removal, although without landslides. Bankers voicing support of the retiring NBU chief last week preferred to keep a no-comment stance yesterday. This is understandable, considering the prospects of relations with the next number-one banker of Ukraine. “Everybody is nervous, biding his time,” said the head of the currency department at one leading Kyiv bank.
It is generally known that the national budget deficit could well surpass UAH 5 billion by the end of 2002. Volodymyr Stelmakh claimed he was being pressured to rev up the money-printing presses. Until now the NBU was adamantly against this solution to the budget problem. What will the new chief of NBU have to say on the subject? Serhiy Tyhypko must come out with an unequivocal statement, otherwise tensions on the money market may reach the critical point.
Andriy Blinov, leading economist with the International Center for Policy Studies, believes that one should not expect Serhiy Tyhypko to any decisions capable of aggravating the money market situation. The ICPS intends soon to revise its findings on the economic situation in Ukraine. “There will be no sharp moves in either direction. The TAS group is likely to prosper, but that doesn’t mean that we ought to expect any grave consequences for the UAH exchange rate — or on any other markets for that matter,” Mr. Blinov said. In his opinion, the lawmaking majority factions are only too well aware that those in charge of NBU, Savings Bank [Oshchadbank], and Ukreksimbank will in the near future be as influential as cabinet members.
The thing to be considered is that Ukraine’s serious budget problems will force the cabinet to actively seek loans on the domestic market. The commercial banks, taking a critical view on the political and economic risks involved, will not be prepared to credit the government at low interest rates. Under the circumstances, the cabinet will have to rely on the state-run banks and the NBU for stable money supplies. If these banks are run by the right kind of people, the government securities/bonds will be secured a stable market demand. At present, the Oshchadbank and Ukreksimbank boards are presided over, respectively, by Oleh Dubyna and Vasyl Rohovy.
