Yanukovych Submits Law On Ukraine’s Central Bank Independence

KIEV, Ukraine -- Ukraine’s President Viktor Yanukovych submitted to the Parliament a draft law he says will strengthen central bank independence and help the country qualify for International Monetary Fund and World Bank loans.

Ukraine's Central Bank

Yanukovych wants to extend the governor’s term of office to seven years from five to avoid a changeover coinciding with parliamentary and presidential elections, according to the draft, posted today on the website of the Kiev-based assembly.

The governor, his deputies and the bank’s board must also suspend any party memberships and cannot hold shares of any commercial lender.

Ukraine reached an agreement with the IMF on July 3 for a new $14.9 billion loan after a fund mission approved economic policies aimed at narrowing the budget deficit.

The lender’s Executive Board will make a final decision by late July following “approval of legislative changes relating to the budget and financial sector,” the IMF said.

The World Bank said it is also ready to give Ukraine a loan to cover the deficit and to stabilize the financial industry after the IMF resumes lending and after the country adopts some laws, Martin Raiser, the lender’s director for Ukraine, Belarus and Moldova, said on July 1.

The central bank’s priorities are to ensure stability of the hryvnia and consumer prices, according to the draft. The bank is also banned from giving loans to the government, including financing the deficit.

Yanukovych wants to increase the number of deputy governors to six from four. The bank’s council should not have a right to veto board decisions, the draft says.

The governor, his deputies, members of the board and members of the council are also forbidden to take the post of chief executive officer at a commercial lender during the first year after they resign from the central bank, the law states.

Source: Bloomberg