Bloomberg: Zelensky wants to replace Kyrylo Shevchenko as NBU head

President Volodymyr Zelensky wants to replace the head of Ukraine’s National Bank Kyrylo Shevchenko, according to three people familiar with his plans, Bloomberg reported on Oct. 18.

The NBU didn’t confirm the rumors about Shevchenko’s replacement. “The governor of the National Bank continues to work, following the Ukrainian laws,” the press service of the NBU told the Kyiv Post. “The National Bank has many important tasks ahead.”

Zelensky’s spokesman Sergii Nykyforov told the Kyiv Post that if the president decides to replace Shevchenko, he will announce it officially. 

“These rumors have been circulating since the beginning of summer and have not yet materialized,” he said.

However, Zelensky has publicly questioned Shevchenko’s performance and even said that he regretted appointing him.

“Everyone makes mistakes. Kyrylo is my big personnel mistake,” Zelensky said during July’s meeting with NBU employees who resigned, complaining about the bank’s leadership.

According to a Kyiv Post source who was not authorized to talk to the media, Zelensky postponed Shevchenko’s dismissal because Ukraine was still negotiating with the International Monetary Fund about the next $700 million loan tranche. 

Economic expert Eugene Dubogryz concurred with this statement. 

“International partners have a negative attitude towards any changes in the governance of the central bank unless a necessity causes them,” said Dubogryz.

On Oct. 18, the IMF announced that it reached a staff-level agreement with Ukraine, which may lead it to resume lending under its $5 billion program. 

However, it is unclear when Zelensky will feel “comfortable” enough to replace Shevchenko: now or after receiving the IMF’s tranche, the same undisclosed source said.

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Shevchenko, the former head of state-owned Ukrgasbank, became the new governor of the NBU in July 2020 after his predecessor Yakiv Smolii resigned due to political pressure.

According to Bloomberg’s sources, Zelensky isn’t happy with Shevchenko’s performance. Since Shevchenko was appointed, numerous employees, including deputy governors, several department heads and their teams resigned, unnerving Western partners, including the IMF. 

Many of these former employees had told the Kyiv Post that Shevchenko’s autocratic leadership style made it hard to maintain a collegial environment at the central bank.

A second highly-placed banking source told the Kyiv Post that the IMF had raised concerns about the quality of Shevchenko’s governance and may have pushed for his dismissal. 

This source added that Andriy Yermak, Zelensky’s chief of staff, also pushed for Shevchenko’s dismissal. 

Zelensky started thinking seriously about replacing Shevchenko when he received information from three different sources that international partners are unhappy with the current NBU head. 

The president became increasingly concerned about meeting the IMF’s conditions for receiving another tranche within the fund’s $5 billion program, which expires in December. 

Economic performance 

To dismiss Shevchenko, Zelenskiy needs approval from parliament. However, it could be tricky as the parliament didn’t have enough grounds to fire the NBU head, said Dubogryz.

“Ukraine’s banking system, economy, and monetary policy are relatively stable,” he added. “The banking system is in its best shape of the last ten years.”

According to Dubogryz, the current NBU head can be blamed for high inflation, which reached 11% in September this year. Shevchenko also keeps Ukraine’s policy interest rate high — at 8.5% as of today. 

According to economist Oleksiy Kushch, the high interest rate was one of the reasons why former NBU governor Smolii was forced out in 2020. Zelensky allegedly accused Smolii of keeping interest rates too high, although they had dropped from 8% to 6%.

Although NBU’s monetary policy under Shevchenko did not change much, the way he managed the bank did, experts said. 

“Shevchenko rules the NBU as he ruled a commercial bank,” said Kushch. “However, commercial and monetary banking are incompatible with each other, and Shevchenko proves it — his skills are not right for the NBU,” Kushch said.

Uncertain future

Zelensky may have to postpone his decision to replace Shevchenko either because more urgent issues might take precedence or because a suitable replacement may not be found quickly. 

One of the Kyiv Post’s sources said the current frontrunners for this position are Vladyslav Rashkovan, the IMF’s alternate managing director and Tymofiy Mylovanov, the former economy minister and current top aide to Zelensky’s chief of staff.

Bloomberg’s sources said that Zelensky wants to find a replacement before suggesting that lawmakers dismiss Shevchenko. 

Yermak is responsible for searching for candidates, a person close to the president’s office said.

If dismissed, Shevchenko could start blaming the government for political pressure — it is a narrative he promotes among journalists and foreign partners, according to one of the Kyiv Post’s sources.