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Tuesday, January 28, 2020

World Bank approves $500 million policy loan to rehab Ukrainian banking sector

The World Bank recently approved a $500 million development policy loan to support a banking sector rehabilitation program in Ukraine.

NBU Governor Valeria Gontareva said at a press conference that the program is aimed at putting Ukraine's banking system back on a sound footing, as well as improving its performance and tolerance of both domestic and external risks. She also said the program should strengthen the financial and regulatory capacity of the Deposit Guarantee Fund for the resolution of insolvent banks.

"Presently, the future looks bright for the Deposit Guarantee Fund," Gontareva said. "Among other things, this is due to amendments to the legislation that provide for the possibility for credit resources to be used to fund this institution."

Prompted by the need to calm the interbank foreign exchange market, Gontareva said she intervened in the market twice last week, adding that the National Bank could impose ad hoc administrative measures to stabilize it if market players continued to exhibit irrational behavior.

Gontareva said she intended to table a draft law on the protection of creditors' rights in the Committee on Economic Reforms, of which she is a member.

"The proposed law is meant to establish strict requirements with regard to the protection of creditors' rights and a very simple, understandable and transparent foreclosure procedure," Gontareva said. "The National Bank of Ukraine is committed to exerting efforts to get this draft law enacted as it would help improve the investment climate in the country."