Rada passes laws on strengthening NBU's independence from IMF package

The Ukrainian parliament on Thursday passed amendments to the law on the National Bank of Ukraine (NBU), to the Budget Code, and other laws to strengthen the institutional base of the central bank, increase its efficiency and build its infrastructure (draft laws No. 2742 and 2743), which is one of the conditions for the provision of the second tranche under the IMF program.

A total of 232 and 234 lawmakers respectively supported the amendments, an Interfax-Ukraine correspondent has reported.

As reported, Ukrainian President Petro Poroshenko's bills on amendments to various laws and the Budget Code (Nos. 2742 and 2743) were registered in the Ukrainian parliament on April 25. The amendments to the law on the NBU to strengthen its institutional base and efficiency are one of the benchmarks of Ukraine's Extended Fund Facility (EFF) program approved by the IMF.

According to the EFF, the amendments are to focus on four key elements: the board and council of the NBU, the autonomy of the NBU, its total reserves, and its distribution of profit.

It is planned to transform the board into an executive committee consisting of the head and deputy heads. The reformed board will be responsible for forming and implementing monetary-credit and currency policies, as well as regulating the banking system.

As for the NBU Council, its supervisory powers are to be reinforced by imposing full responsibility for the internal control and risk management system and creating an audit committee by the council.

Regarding the NBU's autonomy, it is planned to strengthen the personal autonomy of members of the NBU Council and deputy heads supporting the financial autonomy of the central bank.

The rules governing the distribution of profits between the NBU and the government should aim at gradually boosting total reserves to achieve 4%, 7% and 10% of monetary liabilities in late 2014, 2015 and 2016 respectively. It is planned to amend the Budget Code to prevent the inclusion of advance payments of profit to the budget.