The NBU leaves prime rate at 6% amid scandal court ruling on Privatbank

UKRAINE - In Brief 04 Sep 2020 by Dmytro Boyarchuk
Yesterday, on September 3rd the NBU Board again decided to leave prime rate unchanged at 6%. Press-release mentioned reviving demand and energy prices’ increase. Also the NBU assumes continued cooperation with the IMF. Among major risks the NBU mentioned “negative impact of certain court rulings on macrofinancial stability”. And this risk looks like it has already been realized. On September 2nd, the Pechersk district court of Kyiv ruled to return $350 million deposit in Privatbank to the family of Surkis, who were recognized as related parties with former Privatbank owners. The Supreme Court still might overturn the decision. However, in light of toothless position of president Zelenskiy on judicial corruption, hope for revision of the decision is negligible. The impact of the decision on $350 million will be huge. Many other depositors whose funds were turned into capital during the Privatbank nationalization will use the precedent to return deposits. Ex-Minister of Finance Alex Danylyuk called this move as “the start of reversal in Privatbank nationalization”. Against the backdrop of all blunders, Ukrainian leadership has delivered over the last few months, we can hardly expect the NBU assumption on continued cooperation with the IMF has any touch with reality. Next meeting of the Board will be on October 22nd.

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