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grow.
Oschadbank will start accepting applications for new business grants in July. Beginning July 1, the State Savings Bank will begin accepting applications from Ukrainians for microgrants of up to UAH 250,000 for a new business or the development of an existing business. According to a government decision, Oschadbank has become the authorized bank of the new state program eRobota, which will provide Ukrainians with grants of up to UAH 250,000 ($80,00) for starting a new or developing an existing business. Any Ukrainian (individual) or legal entity can become a participant in the program. With a state grant in the amount of up to UAH 250,000, an entrepreneur or legal entity will be able to purchase equipment, pay for raw materials and equipment, and make a partial rent payment. In cases where one or two jobs are created for more than three years and the business pays taxes during this period, the grant does not need to be paid back.
8.2 Central Bank policy rate
The National Bank of Ukraine has raised the discount rate by a massive 15%, from 10% to 25%, Epravda reported on June 2.
"After considering several scenarios, the National Bank decided to raise the discount rate by 15 percentage points to 25%," said NBU Chairman Kyrylo Shevchenko in a briefing.
The NBU expects that raising the discount rate to 25% will be sufficient to ease the pressure on the foreign exchange market and stabilise inflation expectations, which in the long run will create the preconditions for the transition to a cycle of lowering the discount rate.
According to the NBU, a slight increase in the key rate would not have a significant impact on the financial and economic system due to the limited effectiveness of the monetary transmission mechanism during the war.
It is believed that this would create expectations of further increases in the discount rate and, accordingly, the waiting position of depositors and low interest in hryvnia assets. Also, in order to revive interest in hryvnia assets, their yields should exceed expected inflation rates.
In addition, the regulator has expanded the corridor of interest rates on monetary transactions with banks to create additional space for the revival of the interbank market. From June 3, the rate for refinancing loans will be equal to the discount rate plus 2%, and for certificates of deposit, the discount rate minus 2%.
The rate increase was criticised by an adviser to Ukrainian President Volodymyr Zelenskiy's office, who said the rate was too high and dangerous to the economy during wartime. It was not clear whether he was speaking in a personal capacity.
The National Bank of Ukraine (NBU) had frozen its main rate 10% at the start
46 UKRAINE Country Report XXXX 2018 www.intellinews.com