Ukraine, which has been plagued with corruption for some time, has once again fallen into further turmoil this week. The director of the National Bank of Ukraine Yakiv Smoliy has suddenly resigned over alleged political pressure that violates International Monetary Fund guidelines.
The current president of Ukraine, Volodymyr Zelensky, was elected in 2019 based on his promises to combat the country’s serious plague of corruption. However, it appears that his campaign promises have come short, as several high-ranking officials have either been fired or quit, and in turn are accusing Zelensky of relapsing into old ways and taking part in insider dealing.
Last month, the IMF approved $5 billion in emergency lending for Ukraine as a means of providing much-needed financial assistance in fighting the coronavirus pandemic. As one of IMF’s fundamental conditions however, Ukraine must ensure that there is full independence of its central bank as a means of preventing politically motivated oligarchs from dipping into the aid.
So far, Ukraine has received a $2.1 billion portion of the aid on June 12, but with 15 weeks still remaining in the 18-month IMF agreement, National Bank of Ukraine’s director, Yakiv Smoliy has resigned from his position, stating that the central bank has been under systemic political pressure and the situation has become unendurable. However, Smoliy did not explain by whom he was pressured, or how.
In response to Smoliy’s sudden resignation, the IMF reiterated the basis of its approval for Ukraine’s emergency lending, stating that independence of the central bank must be upheld. In addition, Zelensky’s office also provided a brief statement on ensuring that independence in maintained, but stopped short of commenting on Smoliy’s resignation.
Information for this briefing was found via The New York Times and Financial Times. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.