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going to enter the capital of Ukraine's state-owned giant Oschadbank , the multinational' lender's President Suma Chakrabarti said at a meeting of the National Investment Council in Kyiv on May 25. According to separate media reports, the Ukrainian government intends to sell 20% of the bank's shares by late 2020 and bring the bank to an initial public offering (IPO) to place 25% of shares by late 2022. In October, the EBRD greenlighted a €50mn loan to Oschadbank under the Trade Facilitation Programme. The project is undertaken within a broader effort aimed at facilitating Oschadbank's commercialization and preparation for eventual privatisation in the context of the state-owned bank reform program that is developed and being implemented by the government of Ukraine.
8.2 Central Bank policy rate
The National Bank of Ukraine (NBU) kept its key policy rate unchanged at 17% due to the fact that "the current monetary conditions are sufficiently tight to bring inflation to its medium-term target", the regulator said in a statement on May 24.
The move followed the central bank's April decision to keep its key policy rate unchanged . In March, the regulator increased its key policy rate by 1 percentage point (pp) to 17% .
According to the NBU, inflation continued to decline in April-May 2018, as projected by the central bank. Specifically, headline inflation decelerated to 13.1% year-on-year last month. "This was a minor deviation from the NBU’s latest forecast, caused by the most volatile components and likely to vanish in the coming months," the regulator's statement reads.
"In line with the NBU’s preliminary estimates, inflation is expected to decrease markedly in May, reflecting both statistical base effect and a significant drop in food prices. The NBU’s tight monetary policy continued to contain the underlying inflationary pressure," the regulator added.
Ukraine's core inflation stood at, at 9.4% y/y in April.
The NBU forecasts that headline inflation will reach 8.9% as of the end of 2018 and will return to its target range in mid-2019. "This will be further driven by the monetary conditions, which are already sufficiently tight," the statement reads.
At the same time, this forecast will remain relevant "only if its key assumption materialises", which is the sustained progress in structural reforms, particularly under a $17.5bn support programme agreed between Kyiv and the International Monetary Fund (IMF) in 2015.
"These reforms are critical for both maintaining the macro financial stability and ensuring the long-term economic growth in Ukraine," the NBU added. "The near future will be crucial for taking decisions that are important for extending cooperation with Ukraine’s official lenders."
The need for Ukraine-IMF cooperation has become "stronger" as developing countries’ access to the global capital market is narrowing. Borrowing costs are rising for these countries amid the US dollar appreciation, increased geopolitical tensions, and risks of trade wars, the regulator underlined.
49 UKRAINE Country Report June 2018 www.intellinews.com