Ukraine’s first female central banker embraces IMF

Ukraine’s first female central bank governor will need every degree of the trust she enjoys in Western financial circles to steer the corruption-stained country from the verge of bankruptcy.

Valeria Gontareva won easy parliamentary confirmation on Thursday to what some see as Ukraine’s most thankless job.

“I think that my appointment is a positive signal to bankers,” the fluent English speaker told reporters on her way out of the confirmation hearing.

“I hope it also will be a positive signal for foreign investors.”

The 49-year-old capital markets expert worked for most of the past two decades in the upper echelons of Kiev’s branches of Amsterdam-based ING Bank and France’s Societe Generale.

She began her career in 1993 as the chief economist on Kiev’s Interbank Currency Exchange — the beacon of a new free market thinking that was just emerging from the ruins of the communist Soviet empire.

One of the first calls of congratulations came from International Monetary Fund (IMF) Managing Director Christine Lagarde — a fellow woman warrior in the male-dominated world of high finance whose support will be sorely needed by Gontareva.

Lagarde applauded Western-backed President Petro Poroshenko for his selection and “assured him that she supports the actions of the Ukrainian government and is willing to pursue fruitful cooperation,” his office said in a statement.

– ‘European values’ –

Ukraine was on the verge of defaulting on its foreign debt and freezing social security payments when Russia withdrew a $15-billion (11-billion-euro) lifeline it had thrown Viktor Yanukovych prior to his February toppling by waves of pro-EU protests.

The value of Ukraine’s currency began to plumet and the cost of its foreign borrowing spiral out of control — a sign that investors had little faith the government’s ability to regain some semblance of control.

But Gontareva saw the meltdown as a rare opportunity to push through the radical but deeply unpopular economic restructuring measures whose rejection by previous governments turned Ukraine into one of Europe’s poorest states.

The nation of 46 million people — once seen as the breadbasket of Europe with a powerful industrial sector in the east — saw its economy expand by precisely 0.050 percent since 1993.

“I am for European values. I have always been in favour of restoring cooperation with the International Monetary Fund,” she told the Liga financial news site in February.

“Their prescriptions are essential for our economy. The sooner we start implementing them, the faster we will start moving in the right direction,” she observed.

“And the IMF is even giving us money for doing this! I view this money as much more valuable than Russia’s.”

But the current pro-Russian insurgency in the eastern rustbelt threatens the work of vital factories, making even the Moody’s prediction of a five-percent economic contraction this year look optimistic.

The new government’s Western backers have cobbled together a $27-billion (20-billion-euro) assistance package whose disbursal over two years will depend on Ukraine’s commitment to the IMF economic revival plan.

One of Gontareva’s main jobs will involve assuring her Western colleagues that Kiev is firm in its commitment to a totally new course — a role many believe she will assume with flair.

“She has a good understanding of financial culture,” said Razumkov Economic and Political Studies Centre analyst Vasyl Yurchyshyn.

“We should expect more transparency, openness and clarity in the central bank’s work.”

But her more immediate assignment will involve infusing indebted banks with cash so that the entire system does not seize up in the same manner that set off the 2008-2009 global financial crisis.

And she must do this while keeping a rein on inflation — recently addressed with a hike of the benchmark interest rate to 9.5 from 6.5 percent — and at same time stimulating business growth.

“She will face with many challenges,” said Ukraine’s National Academy of Sciences economist Oleg Ustenko.

“Her first job will be to fight inflation, instill exchange rate predictability, and introduce banking system stability.”