The United States Agency for International Development (USAID) intends to allocate an additional $ 3 million for the Financial Sector Transformation Program in Ukraine.
Thus, its budget will be $ 26 million. It is also expected to extend the project for eight months - until August 27, 2021.
This is stated in the document of the department that RT got acquainted with.
As USAID explained, these measures are necessary to help the Kiev authorities implement financial reforms that mitigate the consequences of the coronavirus pandemic.
“Additional funding and extended time frames will allow the US Agency for International Development to continue to provide assistance to the Ukrainian government in implementing reforms in the financial sector to mitigate the economic impact of the COVID-19 pandemic and support economic recovery,” the document says.
The US agency launched Financial Sector Transformation in 2016.
The program is aimed at supporting small businesses and non-profit organizations in the financial sector, protecting consumers in conditions of "predatory lending", as well as ensuring the independence of the National Bank of Ukraine, the organization points out.
With the additional funds, USAID, among other things, plans to provide Kiev with technical support in the development of a law on the financial ombudsman, and if it is adopted - in the institution of the appropriate position.
In addition, the agency expects to strengthen the capabilities of the National Bank of Ukraine (NBU) as part of its new role as a regulator of the non-banking financial sector.
Note that the stage of development of the non-banking market in Ukraine began in July 2020, when the NBU took over the authority to regulate this area in accordance with the standards of the European Union.
As a rule, the non-banking financial sector includes insurance companies, pension funds, investment funds, broker-dealers.
The document emphasizes that American specialists have already provided support to the NBU.
According to the agency, the institution asked for help in improving the supervision system and training in the management of non-bank financial institutions.
USAID is now ready to assist the National Securities and Stock Market Commission (NKCPFR) in preparing for its new role as a regulator for private pensions and construction finance.
“Considering the work within the framework of the project to create legislation governing the work of non-bank credit and financial institutions, as well as the established stable ties with the NBU and NKCPFR, the financial sector transformation project has all the opportunities to continue this critical activity,” USAID said ...
The agency also plans to develop crowdfunding in Ukraine.
It is planned to launch a pilot project of a platform for fundraising by individuals and small businesses, as well as to develop a new law for international payments.
According to American experts, crowdfunding is "a potential source of funds for projects that traditional borrowers, as a rule, do not dare to finance."
According to Oleg Soskin, a political scientist and former adviser to ex-President of Ukraine Leonid Kuchma, the United States is primarily interested in controlling any financial initiatives in Ukraine.
In his opinion, this is due to the adoption in the republic of a law on transferring control over the non-banking sector to the NBU.
“Previously, insurance, pawnshops, patronage offices, mutual aid cash desks were not under the control of the National Bank, but now the NBU will issue them licenses, regulate capital, and so on.
That is, any, even the smallest, funds of every citizen of Ukraine will be controlled.
And this is the interest of Washington ... And to improve the mechanism requires investments, equipment, American software ", - said the interlocutor of RT.
Devastating reform
Financial sector reform began in Ukraine in 2015.
The current administration under the leadership of Petro Poroshenko planned to ensure financial stability in the country, protect the rights of consumers and investors.
The transformations were supposed to be completed in 2020.
One of the key steps was the decision of the authorities to nationalize or liquidate a number of banks.
Thus, Privatbank, the largest bank in the country, owned by businessman Igor Kolomoisky, became the property of the state.
In 2016, at the time of the decision, the institution controlled over half of the Ukrainian banking market.
Privatbank
Reuters
© Gleb Garanich
Kiev explained this step by the need to save the bank from a collapse that could hit the entire economy.
According to Fitch Ratings, overdue loans accounted for 12% of the total number of loans.
After nationalization, in the same year, the authorities added capital to it, first in the amount of 116.8 billion hryvnia, and then another 38.5 billion hryvnia.
The government's actions were supported by the International Monetary Fund.
IMF Resident Representative in the Republic Yost Lyngman said that this was the only effective way to protect the bank's depositors and the stability of the financial system.
“And although this decision required UAH 160 billion of Ukrainian taxpayers to restore the bank's solvency, it ensured the viability of Privatbank for the long term,” he said.
The new Ukrainian head Volodymyr Zelenskiy, in turn, also assured the IMF representatives of their commitment to financial sector reforms.
In May, he signed a law on the banking system that "improved" the mechanisms for liquidating banks, and also ruled out the possibility of returning Privatbank to Kolomoisky.
The IMF insisted on the adoption of this document.
As Oleg Soskin noted, due to innovations in Ukraine, free competition in the monetary and financial sphere disappeared, the state invaded the system of free market capitalism and destroyed private banks, some of which were successful and operated since the early 1990s.
At the moment, more than half of the banking market is made up of state and foreign institutions, added Ruslan Bortnik, director of the Kiev Institute for Policy Analysis and Management.
“In Ukraine, the private banking sector was cleared of independent players.
At the same time, the main source of income for the National Bank is the purchase of bonds.
The system exists on these bonds.
But this is manipulation and fraud, because in fact, the purchase of government debts by state banks is taking place, ”he explained.
Bortnik stressed that the banking system in Ukraine is still not capable of lending, and income from deposits remains low, at 1.5-2%.
“Citizens' incomes on deposits have dropped, since the banking system does not need this money, and it is not going to spend.
The mechanism "deposit-credit-profit" does not work, the system is suffocating, therefore the reforms that have been carried out over these years can only be called defeat and degradation, ”the economist commented.
President of Ukraine Volodymyr Zelenskyy at a meeting with representatives of the IMF
Reuters
© Ukrainian Presidential Press Service / Handout
Not for the good of the people
Residents of Ukraine also remain dissatisfied with the state of the country's economy.
According to Research & Branding Group, even before the introduction of quarantine restrictions, in February, 64% of Ukrainians surveyed considered the economic situation in the republic to be bad, only 4% of respondents rated it as good.
Quarantine worsened the situation for Ukrainians.
The average salary fell from 10.8 thousand hryvnia in February to 10.5 thousand hryvnia in May (about $ 400 and $ 390, respectively, at the exchange rate at that time), and unemployment rose from 370 thousand to 517 thousand.
Against this background, the government continues to raise fuel and electricity tariffs.
In August, gas prices increased by 9%.
Andrey Kobolev, Chairman of the Board of NJSC Naftogaz, said that in September the price of an energy resource could grow by almost 40% more.
According to Ukrainian political scientist and economist Oleksandr Dudchak, reforms in Ukraine are carried out in the personal interests of the administration and those who are behind the political forces.
While the citizens of the country are considered by Kiev as a source of profit.
“The population of Ukraine is a source of enrichment for those who organize reforms.
If the country were left alone with such transformations, it would rather begin to crawl out of the crisis.
But this is not happening, the coup was not done for the same in 2014, ”he said.