Ukraine: A courageous central banker

COPYING AND DISTRIBUTING ARE PROHIBITED WITHOUT PERMISSION OF THE PUBLISHER: CHUNT@EUROMONEY.COM

By:
Published on:

Ukraine’s Gontareva should be lauded for her efforts to clean up Ukraine’s rotten banking system.

Valeria-Gontareva-R-600
On Valeria Gontareva's watch, more than 90 of the country’s 180 banks
were shut down

On April 10, Ukraine’s central bank governor, Valeria Gontareva, resigned. Many in her home country were glad to see her go. Yet with her departure, Ukraine’s chances of achieving meaningful reform, never very high, were appreciably diminished.

Gontareva was the one of the technocrats who volunteered to help build a new Ukraine after the Maidan revolution and the ousting of president Viktor Yanukovych. 

In some respects, she had it slightly easier than the likes of former economy minister Aivaras Abromavicius, who resigned a year earlier after facing endless obstructions in his attempt to clean up Ukraine’s corrupt state-owned enterprises. 

At one step removed from the political arena, Gontareva was able to implement sweeping changes in her own institution, undertaking a massive restructuring of the central bank and hiring a cohort of highly qualified, reform-minded deputy governors. 

But that is no way to underrate the scale of the task she took on nearly three years ago. At that time, the hryvnia was under unprecedented pressure, hard currency was scarce and inflation was rocketing. 

Gontareva oversaw the move to a floating exchange rate regime in February 2015, weathered the hryvnia’s subsequent collapse and managed to bring inflation down to around 12% by the end of last year. 

Notable

Her most notable achievement, however, was the clean-up of Ukraine’s rotten banking system. On her watch, more than 90 of the country’s 180 banks were shut down.

Inevitably this put her on a collision course with Ukraine’s powerful vested interests. They got their revenge by turning her into a pantomime villain through a captive media. 

Gontareva managed to muster the time and energy to trek across the globe reassuring donors, debtors and investors about the situation in Ukraine, whose respect she earned. 

Back home, however, those who should have supported her too often let her down. President Petro Poroshenko, who was responsible for her appointment, proved lukewarm in his support when she was attacked. Nevertheless, she stuck it out for nearly three years. 

In December she took on her greatest challenge with the nationalization of PrivatBank, Ukraine’s largest lender and the property of its most powerful oligarch Ihor Kolomoisky. For this, Gontareva was vilified in the media as never before – despite the fact that nearly all of the bank’s lending was found to be to parties related to its shareholders.

By March, colleagues say she was physically and mentally drained. Having a coffin with a dummy of her in it delivered to the central bank by a group of Ukraine’s more violent nationalists cannot have helped.

Who will succeed her remains unclear. What seems certain, however, is that whoever it is will struggle to match Gontareva for independence, tenacity and commitment.