Ukraine is at risk of another bankruptcy -a hit for president Zelensky.

The head of the Central Bank of Ukraine Yakov Smoliy unexpectedly resigned and it happened in the period of the continuing emission of state bonds, the total amount of which is $ 1.75 million. Now Ukraine as a state once again faces bankruptcy. The fact is that Kyiv needs urgently to ensure the repayment of its debt to foreign creditors of several billion. Only this year Ukraine will have to refinance old loans in the amount of $ 17 billion, the maturity of which is about to expire.

To this end, on Thursday, the Central Bank of Ukraine (NBU) through banks Goldman Sachs and JP Morgan started the subscription for the placement of 12-year Eurobonds with an interest rate from 7.3% to 7.4%. On July 8 this issue of Eurobonds was supposed to be put on the London stock exchange. After the resignation Smoliy, which, according to investors, was "like thunder from a clear sky", these plans were stopped.

After the sudden collapse of the economy following the Russian annexation of Crimea and its support for the war in the East of Ukraine in 2014, Ukraine was able to survive financially only because of billions in aid from the International monetary Fund. In the midst of the crisis caused by the pandemic coronavirus, Ukraine has again received support valued at several billions from the International monetary Fund. Only because of this standby credit agreement, Ukraine had the opportunity to give much-needed loans to its own economy.

According to analysts, the decision by Smoliy for resignation from the post of the NBU Governor is a slap in the face for President Vladimir Zelensky, and a vote of no confidence in relation to his agenda for reforms. Commentators in Kiev after the resignation Smoliy say that the Central Bank will maintain its independence, which is a condition for continuing to work with the International monetary Fund. The international monetary Fund insisted on the repeated mention of the provisions on the independence of the Central Bank in the new agreement backing the loan, which was concluded on 9 June. Party of Zelensky "servant of the people", which has an absolute majority in Parliament, is now preparing a legislative initiative. Ukraine has been rumoring that Zelensky wants to appoint to the post of the head of the Central Bank of Ukraine a loyal person that to a lesser extent will be associated with the market principles in the field of stabilization of the monetary system, noted expert on Ukraine, Timothy Ash, senior independent strategist located in London company asset management BlueBay. He called the resignation Smoliy "a heavy blow for Ukraine, a big risk for the market-financial stabilization of the country; in addition, the resignation casts doubt on reform of the banking sector in Ukraine, directed against such people as oligarch Kolomoisky."

Terror against the leaders of the Central bank.

Smoliy was likely forced to resign because of the strong pressure that was exerted on him by the Ukrainian oligarch Igor Kolomoisky. "For a long time the Central Bank has been under systematic pressure," Smoliy said, explaining the reasons for his resignation. "I want my resignation served as a warning about the possibility of new attempts to undermine the institutional framework of the Central Bank of Ukraine", — he added.

"Guaranteeing the independence of the Central Bank continues to remain our priority," — said the representative of the office of the President Zelensky after it became known about the resignation of Smoliy.

Smoliy, who became the chief of the Central Bank of Ukraine in 2018, is not the only Governor of the issuing Bank who was under strong pressure. Natalia Gontareva, the predecessor of Smoliy as the head of the Central Bank, accusing Kolomoisky, (he is the former owner of the nationalized Privat-Bank, one of the largest financial institution in the country) that he is behind the attempts on her life after the government nationalized his business. "I fear for my life, and my family members tell me to stop" — so Gontareva explained the attack on her in London, as well as the burning of her house in Kiev. The Central Bank of Ukraine considered such attacks a "campaign of terror" and those responsible were named as Kolomoisky.

Igor Kolomoisky, a former friend of Zelensky and owner of the TV channel, which broadcast popular comic TV show involving the current President, suffered a humiliating defeat, and it happened after may 13 Rada, Ukraine's Parliament, adopted the so-called Andikalovsky's act on banks. This law prohibits the state to give back the nationalized banks to their former owners. The adoption of the law has also been a precondition for agreement with the International monetary Fund on providing standby credit. "Private bank" of Kolomoysky was nationalized in 2016, after it was discovered an imbalance of $ 5.5 billion. Most likely, Kolomoisky and his business partners took the money through offshore insider loans. Kolomoisky himself denies the charges. In London the authorities seized his property in the amount of $ 2 billion.

Bastion of stability.

Gontareva at the time used the Central Bank of Ukraine to clean up the banking system of the country, which was continued by Smoliy. This sector was under the control of the oligarchs, who had their assets nationalized and banks were returned to the zone of profit, and the mountain of non-performing loans was cleared and neutralized. The Central Bank of Ukraine pursued a conservative and prudent policy, and he managed to reduce inflation exceeding 60% in 2016 to 1.7% in may of this year.

"The Central Bank of Ukraine was the Bastion of reform and being one of the few competent and progressive agencies in the Ukraine, it enjoyed great prestige among international lenders and investors in Ukraine", — emphasizes the expert on Eastern Europe, Ben Aris who represents the edition of Business New Europe. As you know, the team of the Central Bank of Ukraine "from the time of Euromaidan revolution was under a strong personal (including death threats) and professional pressure, and, however, the Bank began work to clean up the banking system, which is a gold mine for the oligarchs, criminals and those people who are engaged in money laundering," he added. After the resignation Smoliy, the hryvnia exchange rate again went down.

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