(Bloomberg) -- The outlook for the global economy is so
unpredictable that even crisis-ridden Ukraine’s central bank
governor is grappling for new metaphors to describe it.
“The situation is very dangerous and nervous everywhere,”
Valeriya Gontareva said in interview in Kiev on Wednesday. “All
these uncertainties, they are no longer black swans, they are
black elephants flying around the world.”
Ukraine is rebuilding its economy after two revolutions in
the span of a decade and a military conflict with Russia-backed
separatists in the country’s eastern industrial heartland. A
$17.5 billion bailout led by the International Monetary Fund has
been beset by delays as Ukraine failed to meet targets for an
New challenges include a potential rollback
of globalization and the threat of currency wars as the results
of protectionist policies after Brexit and Donald Trump’s
election in the U.S., Gontareva said.
Policy makers in Kiev left their benchmark interest rate
unchanged at 14 percent last month after the central bank raised
its 2017 inflation forecast to 9.1 percent from 8 percent.
Consumer prices last month rose 12.6 percent from a year
earlier, the most in also a year, spurred by a weaker currency.
The inflation rate will drop more quickly in the fourth
quarter as base effects become favorable again, Gontareva said.
That should allow the central bank to ease policy while still
keeping its benchmark above the consumer-price index, she said.
A surge in commodity prices could yet boost gas prices and
inflation, according to Gontareva.
Capital controls, introduced in 2012 and tightened two
years later to contain a spiraling currency crisis, may be eased
if “we feel that the situation is getting better, all these
risks we see now do not materialize” and the cooperation with
the IMF continues, Gontareva said. The “first and most
important” step is loosening controls on dividend payments, she
The country will sign a memorandum for the next bailout
payment of about $1 billion “in a few days,” she said. Ukraine
is seeking four tranches of a combined $5.5 billion from the
Washington-based lender by the end of the year to boost central
bank reserves from to $21.3 billion from $15.5 billion at the
end of last month, according to Gontareva.
The hryvnia, which plunged 42 percent against the dollar in
2015-2016, has weakened 0.9 percent against this year as the
central bank has regularly intervened, which Gontareva described
as attempts to smooth market movements.
Slider Photo: Valeriya Gontareva, governor of the National Bank of Ukraine, confers Wed. in Kyiv (Credit: UNIAN/Anastasia Sirotkina)
Inside Photo: Gontareva meets Christine Lagarde, the Managing Director of the International Monetary Fund at Davos on Jan. 19, 2017 with Ukrainian President Petro Poroshenko. (Credit: UNIAN/Mikhail Palinchak)
Posted Feb. 10, 2017