People'sDeputy Natalia Korolevska of the Yulia Tymoshenko Bloc, who is the chairman of the parliamentary committee on industrial and regulatory policy and entrepreneurship, said that it is appropriate to lower the National Bank of Ukraine's discount rate from 10.25% to 8% per annum.
Bank of Ukraine’s discount rate from 10.25% to 8% per annum.
Korolevska’s press service announced this in a statement.
"The National Bank of Ukraine’s discount rate is too high and does not correspond to the economic realities in Ukraine. Reducing it to 8% today will make loans more accessible, and it will be necessary to lower it further in the future to 7%, the historical minimum that was reached in Ukraine in 2002," the press service said.
According to Korolevska, it is necessary for the government and the NBU to take urgent measures jointly to revive loans to the economy, particularly by reducing the amount that the government borrows on the domestic market and lowering the National Bank’s discount rate.
"The main task is to make credit resources cheaper so that interest rates can facilitate loans provision to the economy and to perform an anti-inflationary function. Moreover, the National Bank of Ukraine should impose strict restrictions to ensure that it is profitable for banks to provide loans to the real economy rather than consumer loans," Korolevska said.
According to her, the Ukrainian economy has not received funds for its development despite the increase in the volumes of the government’s foreign and domestic loans.
"Today, entrepreneurs are forced to obtain loans at 20% or higher annual interest rates, but even only a few are granted loans in exclusive circumstances even at these cosmic rates. It is more profitable for banks to operate with OVDPs (the government’s domestic loan bonds) than to finance the real economy. Under such an approach, the level of industrial development will not reach the pre-crisis levels in 2016 – as the government’s action program projects – in 2016, or even in 2050," Korolevska said.
According to her, the government needs to stop obtaining new loans and ensure that financial resources are accessible to the economy.
As Ukrainian News earlier reported, the National Bank of Ukraine’s discount rate is presently 10.25%, following its reduction by 0.75 percentage point on August 12, 2009.
The NBU left its discount rate unchanged at 8% from June 2007 to January 2008. It raised it by 2 percentage points to 10% on January 1, 2008, raised it by 2 percentage points to 12% on April 30, 2008, and lowered it by 1 percentage point to 11% on June 15, 2009.
