National Bank of Ukraine expecting refinancing debt to decrease as discount rate rises to 25%

MOSCOW. June 8 (Interfax) - The National Bank of Ukraine is expecting a decline in banks' refinancing debt after raising the discount rate by 15 percentage points to 25% per annum, head of the bank's monetary policy and economic analysis department Volodymyr Lepushinsky said.

"We should be expecting a decline in refinancing, considering that our system has a substantial liquidity surplus. There is an incentive for banks to reinstate refinancing, especially as there is money in the system," Lepushinsky said at a roundtable held by the Finbalance agency on Tuesday, as reported by Ukrainian media outlets.

According to Yevhen Dubohryz, an associated expert of CASE Ukraine, former deputy director of the National Bank of Ukraine's financial stability department, such debts, much of which with a floating rate tied to the book, currently reach UAH 145 billion, which is 10% of the amount of bank funding.

Dubohryz noted at the same time that the volumes of purchases of overnight deposit certificates by banks exceed this amount by UAH 40 billion.

In turn, Lepushinsky pointed out that the increase in the discount rate will not significantly affect lending, since in the current conditions, lending is provided mainly within the framework of state programs and will remain so for now.

"We have no lending except for state programs, state-run banks and certain defense loans at this point. There is none, whether the rate is 10% or 25%," he said.

Besides, at a time of crisis people opt to open deposits in state-run banks, which have access to cheaper money, he said.