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Dear Mr. Oleksii Miacheslavovych!

In an interview to RBC-Ukraine on October 21, 2021, you mentioned that “the interest rate in our banking system is completely unfair to business. Our business cannot compete with the interest rate of other countries.”

In 2020-2021, the GROWFORD Institute carried out applied research on the assessment of the monetary stance and monetary policy of the NBU, based on the official data of the NBU, the State Statistics Service of Ukraine, the Ministry of Finance of Ukraine, the Ministry of Economy of Ukraine, the International Monetary Fund, the World Bank and central banks of the world’s leading countries. In this research, the experts of the GROWFORD Institute formulated the following main conclusions:

– In response to the coronavirus crisis, most central banks in the world in 2020 dramatically eased monetary conditions; in many cases, key policy rates were reduced to negative values ​​in real terms;

– Despite the formal statement of commitment to price stability, the monetary policy priorities of many central banks, in fact, have been significantly “shifted” towards promoting solutions to the problems of the real sector and public finances;

– In addition to insufficient easing of monetary conditions in 2020, in early March 2021 the NBU began a new cycle of raising the key policy rate; the formal reason for tightening its monetary policy was the acceleration of consumer inflation, which, however, was mostly non-monetary.

– These actions, of course, did not promote the country’s economic development, and the government had to introduce its own credit instruments and programs for economic recovery (program “5-7-9” and public mortgage lending).

In addition, we draw your attention to the fact that on October 19 the Verkhovna Rada adopted the Law of Ukraine “On Amendments to Laws of Ukraine Concerning Certain Issues of the Activity of the National Bank of Ukraine” (Draft Law No. 5850). The law includes a large number of controversial provisions, some of which may give an idea of ​​the nature of the future monetary policy of the NBU.

There is a real danger that after the President signs the law, Ukraine will have a completely different National Bank – with the Board, which is completely independent and uncontrolled within Ukraine, and with the Council, which has a formal status and unjustifiably narrow powers.

The GROWFORD Institute has experience of effective cooperation with the Verkhovna Rada Committee on Economic Development, the Ministry of Finance of Ukraine, international organizations and donors – USAID, the American Chamber of Commerce in Ukraine and others. If there is a need for professional expertise on these issues and development of draft government decisions, the GROWFORD Institute is ready to join the analytical work of the National Security and Defense Council.