Government and NBU bring cooperation closer in order to ensure macroeconomic stabilization, cheaper mortgages and business loans

Prime Minister of Ukraine Oleksiy Honcharuk, Governor of the National Bank of Ukraine (NBU) Yakiv Smolii, representatives of the Ministry of Finance, Ministry of Economic Development, Trade and Agriculture and NBU discussed macroeconomic stabilization and cheapening of mortgages and business loans at a meeting held on Monday, March 3. The meeting was held within the framework of the Memorandum of Cooperation to achieve sustained economic growth and price stability.

"Further reducing the interest rate from 11% to 7% already in 2020 means cheaper loans. In particular, mortgages can be 10%, and for businesses we increase microcredit up to UAH  2 million UAH at 5-7-9%. Moreover, we are expanding these loans for the purchase of the commercial real estate," Oleksiy Honcharuk said.

According to the Governor of NBU, due to the slowdown in inflation and the easing of monetary policy, banks are already actively reducing lending rates, especially for businesses. "Inflation is declining faster than we expected, and it allows us to actively lower our discount rate, which we did during the winter months. We expect that this year we will finish at a rate of 7% under the condition of continuation of reforms and cooperation with the IMF. It is also necessary to keep inflation in the economy's optimum range of 5% +/- 1, and it will help to reduce the cost of loans for business and the population and to spur business activity, " Yakiv Smolii said.

During the meeting the attendees summed up the winter results for the economy, financial sector and the state budget. Thus, according to the updated data of the State Statistics Service, in 2019 the fall of the industry was not 1.8%, but only 0.5%. The fall, first of all, affected electricity production and coal mining. However, in both cases, it is not a signal for problems in the industry, because it is caused by the unconventionally warm winter.

The Government and the NBU placed a special emphasis on the issues related to the state of the world financial and goods markets, the impact of the spread of coronavirus on them and the assessment of potential consequences for the Ukrainian economy.

It should be noted that NBU’s weekly meetings with the Cabinet of Ministers in the coffee format were launched last year to implement the  Memorandum of Cooperation to achieve sustained economic growth and price stability. The meetings are targeted to coordinate monetary and economic policies, discuss important economic and financial issues in an exchange of views format. Meetings are a platform for information and discussion and are not designed for decision-making.

In particular, today’s meeting was held with the participation of Prime Minister of Ukraine Oleksiy Honcharuk, Minister of Finance Oksana Markarova, Minister of Economic Development, Trade and Agriculture of Ukraine Tymofii Mylovanov, Deputy Minister of Economic Development, Trade and Agriculture Serhii Nikolaychuk, Governor of the National Bank of Ukraine Yakiv Smolii, First Deputy Governor of the National Bank Kateryna Rozhkova, Deputy Governor of the National Bank Dmytro Sologub and Deputy Governor of the National Bank Oleg Churiy.