The economy is growing, but there are a lot of risks. A full report of the NBU for the year 2016

The economy is growing, but there are a lot of risks. A full report of the NBU for the year 2016

The head of the NBU Valeria Gontareva© UNIAN

For the year Ukraine’s GDP will grow by 1.1%.

In 2016 Ukraine’s economy is gradually rebounding from the precipitous fall and increases the growth rate. At the end of the year, GDP should grow by 1.1% and inflation will decrease to 12%.

Such forecasts, the national Bank published in the December financial stability report.

“Systemic risks of the Ukrainian financial sector decreased during 2016. Risk reduction contributed to the macroeconomic environment. Real GDP is growing again, inflation is under control, the deficit of public finances is significantly reduced”, – assured the regulator.

The NBU States that “the improved situation in the real sector debt burden has ceased to be critical for many businesses and industries. Individual sectors – agriculture, mining and light industry, infrastructure industry are now appealing for the resumption of lending. Banks should pay attention to focused on the domestic demand, companies in these sectors, as well as on profitable small, medium and micro businesses with a moderate debt burden”.

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Key risks to financial stability, the national Bank of Ukraine considers these factors:

– the possibility of an escalation of Russian aggression in the Donbas;

– the slow economic growth of major trading partners;

low pace of reforms;

– high probability of a delay of financing from the IMF and other creditors.

“The experience of Ukraine shows that the termination of cooperation with international financial institutions inevitably leads to deceleration of economic transformation. Therefore, full implementation of the joint programme with the IMF should be a priority for all authorities”, – said the head of the NBU Valery Gontareva.

At the same time, in the long term financial stability is also hampered by the lack of progress in the protection of the rights of creditors, the delay in judicial reform and the adoption of necessary laws, a lack of coordination between law enforcement agencies.

NBU recalls the completion of the main stage of cleaning the banking system from insolvent and risky banks. Also notes the influx of banks deposits and funds business. Banks have enough capital and liquidity to restore lending to the economy, the NBU is confident. The national Bank also predicts that in 2017 the banking sector for the first time in the last three years of losses to finally make a profit.

“In the short term, the main risk of the sector is the possible failure of individual banks, programs of capitalization of the results of diagnostic tests. Without addressing the lack of capital large banks it is impossible to ensure financial sector stability in the long term,” – said Gontareva.

Next year the national Bank plans to continue the gradual easing of time constraints, and begin the liberalization of the foreign exchange management system in General. In the first quarter of 2017 will publish a draft law “On foreign currency”, which overcomes the regulation of the currency legislation and lay new principles of the new regulation. Also, the NBU will continue to tighten requirements for public disclosure by banks of information about their financial condition, which will significantly increase the level of awareness of customers, analysts and media.