National Bank decided not to repeat the mistakes of the first years of independence
To date, the NBU does not plan to return to the practice of purchasing bonds of domestic state debt. This was announced by the head of the National Bank, Yakov Smoly during a conference with representatives of the “Union of Ukrainian Entrepreneurs”.
“The National Bank does not plan to finance the budget through operations with government bonds (OVDP) in the primary or secondary market. The effects of direct budget financing in the form of a devaluation-inflation spiral are well known to Ukrainians who remember the 90s. Therefore, there is no point in returning to this practice.
In addition, he said that the National Bank would continue to use its instruments to ensure price stability, with the discount rate also regulated, as it had done in the past.
“It is the adoption of banking legislation in the second reading and changes in the state budget for 2020. These funds will simultaneously replenish international reserves and allow the state budget deficit to be met.
Banking legislation may be important for the IMF installment, which should be $ 4 billion. The interest rate on IMF loans is 2-3% per year, so the government is interested in acquiring these funds.
Summary PAYSPACE magazine
Recall that a good incentive for the situation with the dollar in the country was progress in resolving the issue of financial support for Ukraine in IMF installments, which, in turn, helped in the launch of the land market. Only the laws on banks remained.
It is worth noting that in the absence of cooperation with the IMF, the budget deficit would have to be financed by issuing burn reserves and national currency.
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