Ukraine gets new central bank chief as Ihor Sorkin takes over from Serhiy Arbuzov
Both men are close allies of President Yanukovich
Kiev:
Ukraine’s parliament voted in a new central bank governor on Friday, reinforcing President Viktor Yanukovich’s tight grip on policymaking and paving the way for loan talks with the International Monetary Fund.
Ihor Sorkin, 45, takes over responsibility for monetary and exchange rate policy from Serhiy Arbuzov against the backdrop of an economic slowdown in the former Soviet republic.
He will also be a key player in talks with the IMF, expected to begin later this month on a new financing package to help the country service at least a part of $9 billion in foreign debt repayments falling due this year.
A close ally of Yanukovich, Sorkin once worked at the central bank office in the president’s home region of Donetsk. He became the bank’s deputy head in July 2010, shortly after Yanukovich became president.
“It does not really matter today who the central bank chairman is because we see that the most important factor in picking government and central bank officials is their personal loyalty to the president,” said economist Andriy Novak.
Previous bank governor Arbuzov, also a close associate of Yanukovich, was named first deputy prime minister in a government reshuffle at the end of December.
Speaking in parliament before Friday’s vote, Sorkin described the bank’s current monetary policy as “balanced” and said he would focus on bringing down borrowing costs for Ukrainian businesses by increasing funding of local banks.
Brokerage VTB Capital said in a note on Friday that significant policy changes were unlikely under Sorkin, who takes over with immediate effect.
“We believe that the central bank’s key policies and priorities under the new governor will not differ too much from those of recent years. The focus will remain on protecting hryvnia (currency) stability, with all else of secondary import (including elevated and volatile local rates),” it said.
“That is, unless external factors (such as the IMF or another round of the global crisis) force the central bank to start introducing notable policy changes.”
