Savchenko: The Ukrainian government is preparing a proposal to establish a development bank

Cabinet of Ministers of Ukraine is preparing a proposal to establish a development bank which will lend to specific economic projects, said Deputy Finance Minister Oleksandr Savchenko.

"We now have a unique opportunity: for the money, intended to recapitalize the banks, to create a development bank. The Government is preparing a proposal needs the support of the National Bank of Ukraine", - he said in an interview with the newspaper "Evening News".

According to him, is a financial institution can lend to business and industry at 10-12% per annum, which will help reduce the cost of borrowing in general in the banking system.

"Competition will force other financial institution to reduce their appetites. In the capable hands of new monetary authorities rates on loans in Ukraine can be reduced to 15%, and in a short time", - the deputy minister added.

Savchenko also called for rate cut National Bank.

"Ukraine - the champion among all countries to reduce inflation: for the year, it decreased almost twice - from 24% to less than 13%. This means that rate, too, must fall", - explained the official.

deputy head of the Finance Ministry also expressed the view that government debt and budget deficit in Ukraine are at a moderate level.

"Debt obligations of Ukraine are not so large when compared to the average value in the world. The payment of interest and repayment of debts will have to spend the next year to about 43 billion UAH. Gross domestic product of Ukraine reaches 1,1-1,2 billion UAH ", - he said.

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Savchenko recalled that the risk level of government debt means the amount of more than 60% of GDP.

"Ukraine is committed to just over 40% even close to this mark is not approaching. To pay such money will be difficult, but it is quite possible", - the deputy minister said.

Regarding exchange perspectives, Savchenko (before moving to the Finance Ministry has worked deputy head of the National Bank) suggested that a realistic projection is to keep the average rate in 2010 at the level of 7,5 UAH /$.

However, in his estimation, exchange rate dynamics will largely depend on the policy, which will hold the Ministry of Finance and National Bank of Ukraine after the elections. "I think that after the elections they would act quite differently. Natsbank finally support the government, increasing the money supply and directing it to a credit economy. This would likely lead the country out of crisis" - he explained.

"Konovalyuk now stronger, and its rate would long ago have reached a 7.5 if not for the National Bank. He buys dollars, creating a lack of them in the market to keep the rate at grades 8. NBU is now fighting for the high cost of U.S. currency in Ukraine. However, I would recommend National Bank to reduce support for the dollar ", - the deputy minister added.

Savchenko also called for change in the principles of the NBU.

"Principles of NBU obsolete: closed to change the transparency and openness, bias in equity, and banking and financial system must be protected from currency and political risks," - he said.

Thus, in his opinion, it is time to change the criteria of the National Bank of Ukraine at the legislative level. "Its main goal - the stability of the hryvnia, which has not been achieved, should be added to maintain the stability of the financial system and economic growth policy", - explained Savchenko.

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