VOLODYMYR BONDAR:ALL OUR RESERVES ARE IN WESTERN BANKS 

It is true that a degree of misunderstanding has been registered lately in Ukrainian-IMF relationships with regard to Ukraine's foreign exchange reserves (was Mr. Bondar's opening remark). But first let me explain that the notion of "foreign exchange reserves" is quite capacious, made up of several components: gold (in the National Treasury and foreign bank vaults), balance of account, and short- and long-term deposits. In addition, such funds are often in what we call an investment portfolio. In other words, we hand such funds over to a foreign bank for it to manage them and we are paid interest. We also had some reserves (not much) in terms of securities, not Ukrainian but foreign (German, American...). It is generally known that most our foreign exchange reserves are formed at the expense of IFI credits. The National Bank pays interest on these credits, so we must try to make up for these expenses somehow.

And so, before receiving the first tranche under the IMF credit, I explained certain aspects of the placement of foreign exchange reserves, primarily with an AAA Swiss bank - and AAA means that this bank has own assets that are considerably larger than all those possessed by the National Bank of Ukraine. An amount of $200 million was given in two $100 million installments, secured by external government bonds (popularly known as Gasprom bonds)."

Q: But we all heard about $200 million vanishing from a foreign bank account. So what really happened?

A: If I have an amount in U.S. dollars in my clearing account, no matter with what bank, this money originates form the United States, because U.S. dollars are issued only by that country. All our reserves - previously $2 billion and now a different amount - are placed with Western banks, except the hard cash stored in the NBU basement vaults.

Q: You mean that no money has disappeared?

A: Precisely. That money is on deposit, confirmed by an accounting report.

Q: What about the first $267 million IMF tranche we have received?

A: This tranche is still in SDR, not in dollars. Certain aspects of its being used for monetary intervention remain open because certain anticrisis clauses are still to be worked out. Incidentally, the IMF tranche was followed by a World Bank one addressed to the Finance Ministry which will be used to buy out bonds from the National Bank.

Q: And the currency corridor, will it be renewed?

A: We see no reasons for a strong devaluation of the hryvnia. The Ukrainian GDP is twice as good as that of Russia and our trade balance has improved somewhat. We have prevented the nonresident exodus from the domestic market by restructuring about 78% of the debts. Of course, this corridor serves as a stabilizing factor for all business entities. However, the main thing is to have a good trade and payment balance, and inland investment flow.