Remarks by Prime Minister at a session of the Cabinet of Ministers of Ukraine on February 25, 2015

Good day, dear colleagues, dear members of the media!

We have today a regular meeting of the Cabinet of Ministers of Ukraine and a range of important issues that need to be considered. This includes benefits and subsidies, as well as the recovery of Donbas.

But I would ask the members of the Cabinet of Ministers to fundamentally change the topic of the session of the Government. This morning I found out from the Internet that the National Bank of Ukraine alone, as it used to, with no consultations, made a decision to close the interbank foreign exchange market, which, indeed, gives no additional stability to the local currency, which the National Bank is responsible for. This imbalance of both the financial system and the national currency has a very complex and negative impact on the whole economy of the state.

In the morning there were a range of meetings in order to find out what is happening in the interbank market, which is controlled by the National Bank, as well as trends.

I would probably start with the total volume of currency! Over the past nine months the domestic financial market has sold US$51.5 billion. It is almost the ten-fold amount in relation to the total volume of gold and foreign exchange reserves. This means that the market is filled with dollars. According to information from open sources, I’ve checked this, the total amount of purchase and sale of foreign currency, which are carried out by banks and supervised by the National Bank, is approximately from US$100 to 170 million. This means that the country possesses the currency. This means that part of currency was bought and is buying with the purpose of speculative transactions. With a view to buy at a lower rate and then sell at a higher.

We have repeatedly advised our colleagues from the National Bank to bring the situation under strict control in order to prevent from exporting currency under so-called import contracts, as if to purchase goods, and then these goods come neither within 30, nor 60, nor 90 days and foreign currency is being kept abroad to wait for a higher rate.

What action plan should the Government adopt now? This is within the competence of the Cabinet of Ministers. What does exchange course mean for us as the Government? It affects the budget, the cost of food, the price of gasoline - the whole economy - and creates bad inflation expectations, as well as bad reality.

We believe it necessary to make a few steps within the competence of the Government.

First. I publicly appeal to our colleagues in the Parliament. We called on to convene an extraordinary session of the Verkhovna Rada of Ukraine. The Parliament has already received a package of bills needed to get financial assistance of the International Monetary Fund, "part of which will go to the reserves of the country, fill the foreign exchange market, enable to bring down the panic and return to a balanced course.

We consulted with all the factions of the coalition, except for the largest faction, and we’re anticipating these consultations concerning the adoption of the bills. I should note that there were no significant differences between the Government and parliamentary factions during the consideration of these bills. Therefore, I urge the parliamentary coalition to immediately convene an extraordinary session of the Parliament to adopt the necessary bills and consider the issue concerning the stabilization of the financial system.

We are along with the Minister of Finance, if the Government does not deny, to go to the President of Ukraine so that the President invites the Chairwoman of the National Bank and so that we can directly from the Chairwoman of the National Bank hear about the real picture, which measures are being undertaken and what should be done on the Government’s side to help the NBU stabilize the situation and restore confidence of Ukrainians to the banking system. Clear and understandable steps to make people stop withdrawing deposits, to decrease the current speculative hyperactivity, to make exporters return the currency that they are holding abroad, and to prevent importers from exporting foreign currency under bogus contracts waiting for a higher rate.