You're reading: IMF expects Ukraine to pass law on restructuring of currency loans by Aug. 16

The International Monetary Fund (IMF) expects Ukraine to finally pass a law on restructuring currency credits by Aug. 16, 2014, and demands that the law is passed with certain wording, First Deputy Head of the parliamentary committee for finances and banking operation Oleksiy Kaida has said.

“Representatives of IMF presented their proposals, but they issued an
ultimatum regarding the law: we pass the law with certain wording and
we receive a disbursement… They also ask to pass the law by Aug. 16,”
he said on the Persha Shpalta show on the First National TV channel.

The lawmaker said that on Aug. 16, 2014, the IMF will decide on the
provision of the second disbursement to Ukraine under the Stand-By
Arrangement.

He said that initially the IMF opposed a draft law in which banks and borrowers are to voluntarily agree on restructuring.

He also said that debtors on currency housing credits in Ukraine come
from at least 20,000 families: borrowers are indignant with the
situation when credits that were taken at the Hr 5.05/$1 exchange rate,
today are to be paid at the exchange rate close to Hr 12/$1.

“People are indignant that the National Bank of Ukraine introduced
refinancing for private banks, but it cannot provide for the payment of
the difference between Hr 5.05/$1 and Hr 12/$1,” the lawmaker said.

He said that draft law No. 4185A-2 passed at first reading suits
bankers and the National Bank of Ukraine, but it does not suit
borrowers.

“There is a powerful bank lobby in the parliament: these are owners or co-owners of bank structures,” Kaida said.

The lawmaker proposed that associations of borrowers submit their
proposals to him and he could put them on the draft law during its
revision.

The lawmaker said that the principle of subsidiary liability is not reflected in the document in the due form.

“Borrowers demand an exchange rate of Hr 5.05/$1. We understand that
this is unrealistic. The more or less acceptable decision is to
calculate at the exchange rate as of Jan. 1, 2014 – Hr 7.99/$1.
We’ll start from this exchange rate. The difference between Hr 7.99/$1
and Hr 12/$1 is to be covered by the state or commercial banks. I
support the idea that commercial banks are to pay the difference,” Kaida
said.

He said that banks are to cover the difference from their super-profits.

“It is unprofitable for the bank – it would not be involved in these
transactions. It has large profits… I think that it’s time to share with
those people,” he said.

He noted that the state provide support of around Hr 100 billion to banks.

As for the credit rates, the lawmaker said that the long period of looking for a compromise decision would be seen.

“Borrowers want the rate that they have at the moment when they took
the credit – this is around 9.5 percent. I tried to explain to them that it
would not be so, as if we transfer the currency credits into hryvnias,
it would be impossible to pay at 9.5 percent rate. There are borrowers who took
money in hryvnias and who pay 22-24 percent,” he said.

As reported, the National Bank of Ukraine said that draft law No.
4185A-2 passed at first reading is a compromise: liabilities are
converted into hryvnias at the current exchange rate, but the rate set
for the currency loan is set for the remainder of the credit.