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"Based on the information analysed to date, the defendants laundered about $622.8mn of fraudulent borrowed funds," the bank claims in a 104-page lawsuit, illustrating this charge with specific operations. According to the lawsuit, PrivatBank did not receive refunds in exchange for such transfers, and the loans related to these transfers were not fully repaid. "The schemes worked this way. Loans for the operating activities of the companies were issued. This money was transferred to other companies through several accounts. After that, real estate and metallurgical business in the United States were bought for these funds," Interfax quoted deputy head of the National Bank of Ukraine (NBU) council Tymofiy Mylovanov as saying. On April 8, Kolomoisky said that he is going to seek $2bn of compensation from the nation's government. "I don't need [to get back] PrivatBank. But there was $2bn in capital there. Let them [the Ukrainian government] return it to me and there will be no problems," Kolomoisky said in an interview with the Ekonomichna Pravda online outlet.
Russian state-owned banking giant VTB has filed a lawsuit against Ukraine at the Arbitration Institute of the Stockholm Chamber of Commerce over losses allegedly inflicted on its Ukrainian subsidiary Prominvestbank. VEB believes that Ukraine has allegedly violated a 1998 inter-governmental agreement with Russia over the promotion and providing mutual protection for investment. After a number of unsuccessful attempts to sell Prominvestbank, mainly due to refusal of the National Bank of Ukraine (NBU) to authorise a deal, VEB decided in 2018 to close the bank down. According to last years estimates made by Russian experts, VEB's losses from the closure of Prominvestbank may amount to about $190mn.
8.2 Central Bank policy rate
NBU keeps key policy rate at 17.5%, citing increasing risks. The National Bank of Ukraine (NBU) announced on June 6 it decided not to change its key policy rate at its monetary policy board meeting that day, keeping it at 17.5%, or the same level since Apr. 25. In its press release, the central bank said it believes that this decision will help to downplay the increased inflation risks and reach the inflation target of 5.0% y/y in 2020.
The NBU reminded the public that consumer inflation in March and April exceeded its forecasts. According to the central bank’s estimate, annual inflation increased further in May after reaching 8.8% y/y in April. Meanwhile, the NBU mentioned that fundamental inflation pressure has been lowering, as core inflation has cooled. Inflationary expectations improved as well.
The central bank recalled that the major assumption of its forecast (consumer inflation of 6.3% YTD in 2019 and 5.0% YTD in 2020) was further financial support from the IMF. At the moment, IMF talks are suspended until the appointment of the new government after early parliamentary elections. With this uncertainty on getting IMF financing in 2019, the vulnerability of Ukraine’s economy increases, as with the potential volatility in financial markets.
The NBU also cited rising consumer demand as an additional inflationary factor. Fast growing wages – as well as the developing retail, construction and industrial sectors – are boosting private consumption.
Rising inflationary risks suggest keeping key policy rate unchanged,
56 UKRAINE Country Report July 2019 www.intellinews.com