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privatisation of state banks can start even before the end of the war. The privatisation of state-controlled banks, whose number has increased to five and with a market share of 56%, can be started even before the end of the war, according to the deputy head of the NBU, Kateryna Rozhkova. “If any institutional investors, large investors, become interested in acquiring one of these state banks, then I would not wait for the end of the war," she said. According to Rozhkova, the National Bank is asking the International Finance Corporation (IFC) and the EBRD to continue their work on the privatisation of Ukrgasbank and Oschadbank, which began before the invasion. She also reported that the NBU intends to audit state-owned banks' updated strategies and financial conditions before making further decisions regarding their privatisation. As Rozhkova noted, the National Bank can decide on a recommendation on the best way to privatize this or that financial institution, fully or partially, etc.
8.2 Central Bank policy rate
The National Bank of Ukraine (NBU) kept its key policy rate on hold at 15% on January 25, pausing the series of rate cuts that commenced in July of the previous year.
Andriy Pishniy, the NBU Chairman, underscored that this move aligns with the objectives of sustaining currency stability and tempering inflation in 2024, aiming to achieve the target range of 5% ± 1 percentage point within the monetary policy horizon.
Pishniy said that the NBU's baseline forecast, which predicates on securing adequate international financing and a reduction in security risks in the forthcoming year, projects a marginal decrease in the discount rate from the second half of 2024 onward.
In a dramatic move in June 2022, the regulator hiked the discount rate from 10% to 25% just after the war with Russia started, where it stayed until July 2023.
Subsequently, thanks to encouraging falls in inflation, the NBU started a series of rate cuts, bringing the rate down to 22% in September, 20% in October, and eventually to the current rate of 15% in December.
Ukraine currently has a low prime rate than Russia’s 16% and inflation has been continuing to fall. However, the outlook for 2024 is clouded by the end of US financial support. The government has a Plan B to cover a huge budget shortfall if no more US funding is forthcoming that includes turning the printing press back on to fund the government’s operations that could send inflation spiralling again.
79 UKRAINE Country Report February 2024 www.intellinews.com