Sergey Lyovochkin is among the Ukrainian politicians who can be named young only by age rather than by experience and for sure the level of influence on making vital decisions for the country.

The posts which he occupied working directly with the heads of the state are well-known. The pages of his professional activity are less known, in particular those related to the bank sphere.

In his time Sergey Lyovochkin was a member of the working group which elaborated the Law "On the National bank of Ukraine", for a long time he had been the National Bank Council Member, had been working in the banking system.

Therefore his appointment to a post of the NBU Head from the Opposition Government does not seem casual.

It can be asserted that Sergey Lyovochkin’s assessments of the National Bank actions under conditions of Yulia Tymoshenko’s Government work may not be imposed by political predilections. He will primarily perform as an expert who is to mould the Opposition Government position and thus as well inform public at large about the consequences of the NBU current financial policy.

This is a subject of an interview with Sergey Lyovochkin.

- What aims do you set yourself on a post of the NBU Head and what principles will you adhere at that?

- In my opinion, our common mission should be to restore in Ukraine such stability of national monetary item which we had in 2000-2003, when inflation was at the 5-6% level in the average annual measuring.

We will proceed from that ensuring hryvnia stability is the main task of the NBU activity specified by the Constitution and the Law "On the National Bank of Ukraine". And thereon we will focus our primary attention. Moreover it is necessary to provide not by word of mouth but in practice the actual independence of the National Bank. It is accepted globally and at the same time it is a constitutional norm. The NBU is not responsible for the impact of the Government economic activity. The Parliament is charged with it. Therefore a challenge number one in our work will be to execute control over issues of the Government non-interference in the NBU activities. This is a basic principle.

At the same time one should realize that the NBU does not submit in its activities to the Verkhovna Rada as well. It is merely accountable to the Parliament. It is also a legislative norm. The VR does not ratify the main principles of the NBU monetary policy. The National Bank only informs the Rada about the key characteristics of such a policy. We will not let the NBU to submit to the Government. It contradicts logic and legislative norms which guarantee the NBU independence.

- How are you going to ensure the hryvnia stability?

- I want to emphasize that our function is to control and suggest alternatives. The practical functions are exceptional jurisdiction of the NBU Board. It should be understood that this sphere is very exposed and responsible.

The major focuses in renewing hryvnia stability should be the following.

The first one is to ensure the priorities of the macroeconomic policy; the second one is to balance budget expenses, to constraint dangerous increase in the government consumption share in the GDP structure; the third point is to balance social spending. This is exactly what the Government should undertake to provide money stabilization.

Concerning the NBU monetary policy, it should become tougher. The money supply can not increase at the 30-35% level a year as it is forecasted in the 2008 Basic principles of monetary policy. These rates should be at least twice less. It is a requirement of time.

The prospects that inflation will return to the 5-6% level can appear only under such emission terms. At the same time we will insist on liberalizing the rate of exchange. Only due to this condition it will be possible to speak about an actual decline in the money supply.

- Tymoshenko’s Government exposed to severe criticism the emission policy of their predecessors. What can you say concerning this?

- I have not seen any distinct claims yet, therefore let us wait before making conclusions. Meanwhile the NBU emission activity will be in the core of our rapt attention. It should be based not on the currency market transactions, which absorb the lion's share of emission now, but on refunding commercial banks. However such refunding should be economically grounded, at most transparent, carried out only on a competitive basis. A principle of dividing commercial banks into "ones" and "others" can not be admitted in this issue. Refunding can not be executed by outside instructions. In general the matter concerns the principle: the NBU independence is implemented through independent emission activity. Our position is: "no" to the emission method to solve urgent economic and social problems. Vice versa, the only basis of their solving can be reliable and above all predictable hryvnia stability.

- What can you say about forming and drawing on gold and foreign exchange reserve?

- It is a basis for providing internal and external hryvnia stability. Our principles are: "there can not be too much gold and foreign exchange reserve". And therefore its present volumes require further increase.

The Opposition Government will execute strict control over expending reserves for a specified purpose. It is a question exceptionally of the objects to stabilize the hryvnia rate of exchange. It completely expels any possibilities of drawing on gold and foreign exchange reserves for other purpose.

An issue of placing gold and foreign exchange reserves and their structure remains to be a challenge (as the 1999 practice proved). And these components of the NBU monetary policy should be transparent.

We do not back an idea of pre-term redemption at the expense of reserves of Ukraine’s external debt to the IMF. Formerly such ideas have been already declared. This is populism. Now they are announced by Petro Poroshenko. We should not weaken but vice versa strengthen the NBU reserve position with all possible measures. By the way it is one of the factors to determine external competitiveness of the Ukrainian economy.

- It is widely claimed that the main problem lies in fostering the country’s banking system, in increasing its reliability and capitalization rate...

- The artificial forcing of the process of bank capital enlargement, its concentration and centralization should be avoided. Existence of a plenty of small and middle banks testifies their competitiveness. It is necessary to pursue a weighted policy on the penetration of foreign capital in Ukraine’s banking system as well. It is necessary to carry out the policy of financial and credit institutions diversification and specialization.

At the moment we do not raise a question about separating the banking supervision system from the NBU. In general this function is well executed. At the same time it should be borne in mind that this problem exists and in the future it should be returned to.

Olga Kononenko, 'Komsomolskaya Pravda in Ukraine ', N285, December 27, 2007