President threatens to sack central bank governor

Yushchenko has accused the Central bank for pursuing a submissive policy with regard to the cabinet, allowing it to resolve budgetary problems by turning on the money printing presses.

“I have vetoed again the bill to allocate hryvnia 10 bln for Euro-2012 finals. Any monetary emission can be critical for hryvnia stabilization. The cabinet should meet its problems by borrowing money from the market, for example, by issuing securities, but not by emissions which devaluate the hryvnia,” Yushchenko argued. Meanwhile the cabinet put pressure on Stelmack to get access to the printing presses, he charged.

This, however, does not exempt Stelmakh from the responsibility, and he must be held accountable, he said. “I was shocked when I learned that the Central bank issued a 22-bln credit to Naftohaz, with the maximum permissible credit standing only at 5 bln. I understand Central bank’s motive to help Naftohaz to pay for gas, but its business is to ensure the stability of Ukraine’s banking system,” he went on.

The cabinet, Yushchenko added, takes most of the blame for the struggling hryvnia. “The Central bank can interfere only in occasional cases while the hryvnia general health is hinged to the cabinet’s budgetary, fiscal and investment policy,” Yushchenko said. Now, the hryvnia is sinking under pressure of a growing national debt, standing at 185 bln, Yushchenko noted.

Despite a positive assessment of Stelmach’s work by the incumbent, it was for the first time that Yushchenko pointed his finger at Stelmach whom he made governor. Recall, that Yushchenko has never before mentioned Stelmakh’s dismissal – even when the Rada gave the governor the vote of no confidence and set up an investigatory commission to look into his track record.

Then, the Rada criticized the Central bank’s bail-out practices, calling them opaque. The commission found out that the bank was guilty of large-scale hryvnia destabilization and inflation.