Ukraine premier wants National Bank chief removed

According to the site, Kinakh delivered a report to the president on Monday, in which he pointed out the National Bank's poor ability to develop and effectively implement the monetary, credit and foreign exchange policy to achieve the long-term goals of stable development, UNIAN news agency reported.

In the report, the prime minister said Ukraine's banking system today shows such trends as a reduction in the number of banks including those involving foreign capital and ongoing high credit interest rates.

Despite a relatively low base rate of the National Bank, at 8 per cent since 5 July, credit interest rates charged by commercial banks dropped only from 29.7 per cent in January to 23.5 per cent in September 2002, the prime minister said.

"The high cost of credit has led to an unacceptably low level of credit resources available to manufacturers and an insignificant share of long-term loans, only 23 per cent of the total volume [of credit resources]," the site says.

The government is disappointed with the fact that the National Bank does not offer refinancing with long-term loans from commercial banks provided for innovation and investment projects.

The report also says there is an absence of radical changes in the monetary policy strategy, a low level of monetarisation in the economy and uncertainty about foreign loans.

The government has tried to deepen cooperation with the National Bank and even suggested signing a memorandum to agree NBU's actions with commercial banks, but the National Bank refused to sign one.

Moreover, meetings of the interdepartmental commission for tax, budget and monetary-credit policy have often been disrupted because NBU Chairman Viktor Stelmakh failed to turn up.

"These facts lead to the conclusion that the management of the National Bank failed to take advantage of the period of economic growth and of macroeconomic and financial stability as an objective condition for working out fundamentally new approaches to developing a monetary and credit policy and developing domestic banking," the report says.