Monetary Monkeyshines?

A little later the apparently shocked (according to eyewitnesses) National Bank (NBU) Governor Viktor Yushchenko called upon the government "to forbid itself to speak about destabilization of the Ukrainian money" and added he "feared a changed governmental course" that could cause the hryvnia to decline. The Premier said he was in favor of a stable hryvnia. Is it clear to anyone what is going on?

It is not to be ruled out that this is clear to stock market operators. According to them, the Premier is again planning to reduce the hryvnia's value, thus lobbying the interests of exporters (incidentally, the hryvnia may be said to have gone down instantly by as many as 5 kopiykas against the earlier daily 1-2 kopiykas). Thus as of last Wednesday morning, the official rate was Hr 3.86 to $1, and the unofficial rate was Hr 4.20. Why the Premier needs this is a different question. What is interesting is how "a word or two" from the Premier could so unsettle the currency market as it did the country, and the pensions so dear to Mr. Pustovoitenko's heart will not be worth a red cent. But who, except maybe the electorate, is worried about this shortly before the presidential election?

Another version (from parliamentary anterooms) of the Premier's statement is also almost customary: a new attempt to hound Mr.Yushchenko out of the NBU governor's seat (Verkhovna Rada says he must go "of his own will" so as to avoid unnecessary IMF queries). And it is not only Parliament that seems to suspect (or want?) this. Mr. Yushchenko himself, who controls day and night the currency market situation, seems to have his nerves on edge. Otherwise, how can we explain why the once superbly diplomatic banker, in response to the Premier's attempts to govern even the banking sphere, reminded him aloud (!) that last year banks extended Hr 1.5-billion credits to cover the budget deficit, with half this amount NOT RETURNED. (This country is also paradoxical in that the banks keep silent about this: they may have written off amounts not returned as simple bribery.) There was no clearly expressed reaction. The ministers must have been "digesting" the Premier's proposal to impose "a state of special rule" on the country. Mr. Pustovoitenko imagines this as follows: one must cut back tax and budget payment privileges, impose the HIGHEST EVER trade surcharges on the value of DOMESTIC and foreign products, establish a single list of deadbeat firms, and allow enterprises to open only ONE settlement and one hard-currency account.

We may suppose the IMF might well lapse into a coma on learning of the new administrative program. And the former will hardly be appeased by the Premier's words that this is "only putting things in order for the time being." The last thing we need on the eve of EFF loans being unfrozen (the IMF Board of Governors meeting is planned for March 26) is a "curfew" as a peculiar feature of Ukrainian democracy and a display of our uninterrupted movement down the road of "presidential" market reforms.

INCIDENTALLY

Presidential adviser Valery LYTVYTSKY refrained from comment, asking us to calm ourselves and our readers, for "the Premier did not speak about an unplanned emission. A planned emission is in the budget of any state. The President opposes an unplanned emission because he understands it will be followed by unplanned inflation. Such steps do not fit in with a certain policy. All NBU steps are directed at liberalization of the market. The National Bank has taken correct and powerful steps. These will be followed by other well-balanced decisions."

Another presidential adviser Anatoly HALCHYNSKY reminded Interfax-Ukraine that Leonid Kuchma had stated his opposition to any emission as early as the beginning of March at a workshop on economic development. "It is very important to the people to believe that whatever the circumstances, Ukraine will not choose an inflationary path of economic development," he said then.

Advisor to the NBU governor Viktor LYSYTSKY told The Day this year's budget envisions a Hr 1.5-billion increment of the money base. "This indicator has been agreed to a thousand times with all, including the IMF. I personally think that a directed emission is a great evil. It does not solve the essence of the arrears problem. We all know that the domestic debt is large (according to some data, Hr 8 billion - Author). In this connection it is clear that to give money only to some would mean hurting others. It is impossible and dangerous to give money to all at once: the market will react immediately, with prices skyrocketing. In other words, money will depreciate. This is common knowledge. I think when the Premier talked of emission, he must have meant the reorientation of its increment toward social payments."