The 'unlucky' governor

(Baonghean) - Valeriya Gontareva is the most controversial figure at the National Bank of Ukraine. She has implemented tough steps to pull the country's economy out of crisis within 3 years.

But that achievement brought her a lot of criticism and hostility. She was eventually forced to leave her position due to assassination threats.

Valeriya Gontareva, Governor of the Central Bank of Ukraine, had to resign in April after being threatened by political opponents. (Bloomberg)

The Governor is being hunted.

During her three-plus years as head of the National Bank, Valeriya Gontareva has implemented a strict policy to stabilize an economy battered by war, annexation and decades of mismanagement and internal strife. Her determination has won the admiration of the International Monetary Fund (IMF) and economists alike.

But that was the source of the persecution against her. Before resigning in mid-April, she had been pursued and threatened by political opponents for a long time.

Valeria had to disconnect her phone at home and repeatedly remove threatening pictures posted on the walls around her home. The extremists even wrote graffiti on the wall with content that defamed her personally.

“For me it was like three years of constant harassment,” said Valeriya Gontareva, stressing that she had no intention of breaking away and running away. Indeed, her duties and responsibilities did not allow her to hide from her enemies. In fact, her every move created conflicts with interest groups in Ukrainian politics.

She has cut the size of the central bank’s bloated bureaucracy from 12,000 to 5,000 employees. And in an effort to clean up Ukraine’s moribund banking sector, Valeriya Gontareva has nationalized 87 banks, accounting for about 60 percent of the country’s banking sector’s total assets.

'“These banks are not really banks. We call them zombie banks. Entities with no assets, and few liabilities,” Valerya said.

“About 20 of them are money launderers. They have no business. They are just set up to launder dirty money.”

An open coffin was placed at the entrance of the Central Bank of Ukraine with an effigy of Valeriya Gontareva to threaten her (Washington Post)

Gontareva transferred the assets of these banks to an agency equivalent to the Federal Deposit Guarantee Corporation in the United States. The largest nationalized bank was PrivatBank, once controlled by Igor Kolomoysky, a Ukrainian oligarch, and his associate Gennadiy Bogolyubov.

PrivatBank was once considered “too big to fail.” That meant no one dared to touch the cancer. Other tycoons disguised as politicians also had Valeriya in their sights.

Steel businessman and independent lawmaker Serhiy Taruta has published a book titled “Gontareva: A Threat to Ukraine’s Economic Security.”

However, outside observers found Governor Valeriya Gontareva's actions to be very positive, even courageous.

“Governor Gontareva has done a tremendous job under extreme circumstances, and despite resistance from some individuals and political factions,” IMF Deputy Managing Director David Lipton wrote in an email.

The Naive Technocrat

Born in the industrial city of Dnipropetrovsk, she completed her bachelor's degree in economics and engineering in Ukraine. Valeriya then joined an investment bank in Kiev - Investment Capital Ukraine, where the current president used to work.

Valeriya Gontareva spent a long time as head of the Ukrainian branch of the French bank Société Géneralé. Therefore, she has a deep understanding of the system and its operations.

Following the Maidan Revolution in Ukraine that led to the ouster of President Viktor Yanukovych, Valeria was given the job of heading the central bank in mid-June 2014.

“I consider myself an experienced banker. I knew exactly what was going on. Of course I knew there would be problems, but I couldn’t imagine what I would face. I was quite naive,” Valeriya told the Washington Post.

The governor of the National Bank of Ukraine has a seven-year term, but Valeriya Gontareva insists she can complete reforms within a year. But the biggest risk is the political crisis she has just entered.

When Valeriya took office, Russia had just annexed Crimea and Ukraine had lost 3.6% of its GDP. Two months into her tenure, separatist forces in the east created new unrest.

Exchange rate fluctuations have been common during President Valeriya Gontareva's term (Bloomberg)

At the time, Ukraine was losing about 15% of its GDP, including 30% of its exports. Its budget deficit was more than 10%, meaning the country was running out of money. The currency was pegged to the dollar, but Valeria’s predecessor had spent $23 billion in foreign reserves to prop up the national currency.

“I promise to write a special chapter for the IMF on what to do when your country is in a real war,” she said.

At the central bank, which Valeriya calls a “medieval monster,” she hired 500 new specialists and fired a number of old staff. Valeriya took the bold step of floating the national currency, the hryvnia, and bringing it back to its real value.

But the unlinking of the hryvnia from the US dollar also led to an increase in the price of imported goods and high inflation. This in turn led to a decrease in income and affected the quality of life of the population.

“Even households criticize us, businesses criticize us. But that is the only way we can stabilize the macro situation,” Valeria said.

Phan Tung