Top banker’s resignation stokes reform fears in Ukraine

Concern over Ukraine's reform prospects has deepened with the resignation of central bank chief Valeria Gontareva, whose overhaul of the country's financial sector saw her shut down almost half of its lenders.

Ms Gontareva said her "mission is complete" and she would leave her post by May 10th, depriving Ukrainian president Petro Poroshenko of a longtime ally and weakening a pro-reform team whose numbers have shrunk dramatically over the last year.

The former investment banker has faced threats, intimidation and vilification from some quarters of Ukrainian politics and business, which her allies put down to her readiness to confront the country’s powerful tycoons, or “oligarchs”.

Ms Gontareva (52) was an easy target for populist politicians who sought a scapegoat for Ukraine’s economic woes, and for businessmen who resented her closure of more than 85 banks that were moribund or suspected of money laundering.

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“I know that if all government institutions conducted their reforms in the same way as the national bank, our country would be at a very different qualitative level in its development today,” she said in her resignation statement.

Amid concern that powerful networks of politicians and businessmen are strangling efforts to modernise and clean up Ukraine, Ms Gontareva said "resistance to changes and reforms will grow stronger now".

She took over at Ukraine's central bank shortly after a 2014 uprising ousted the country's then Russian-backed president Viktor Yanukovich, who was accused with allies of stealing the equivalent of hundreds of millions of euros from state coffers.

Ukraine's economy was also hurt by Russia's annexation of Crimea and fomenting of a separatist conflict in eastern regions, which has killed 10,000 people and left major factories and mines under the control of Moscow-backed warlords.

Tentative recovery

Under her watch, however, the central bank managed to stabilise Ukraine's hryvnia currency while shifting it to a floating exchange rate, and to nationalise the country's biggest lender, Privatbank, when it was found to have a hole of more than €5 billion in its accounts.

Ms Gontareva's team also helped Ukraine retain access to a $17.5 billion (€16.5 billion) aid package from the International Monetary Fund, the latest tranche of which was paid out last week.

The IMF warned, however, that Ukraine’s tentative economic recovery faced risks “from reform delays due to the narrow majority of the governing coalition in parliament and possible policy reversals as key reforms face strong pushback from vested interests”.

Several high-profile reformers have resigned over the last year, complaining of being prevented from overhauling everything from Ukraine’s economy ministry to its police service.

“Your integrity, vision, and sheer force of will have transformed Ukraine’s banking sector,” the US embassy in Kiev said in a parting tweet to Ms Gontareva.

“Now important to appoint an independent professional to carry forward the reform agenda”