Ukraine's economy could grow in 2014 if political forces find compromise, says expert

The quick settling of the political conflict will allow minimizing risks for the economy and banking system in 2014, Head of the supervisory board of Pivdencombank Ruslan Tsyplakov said.

"The delay in the political conflict could result in large financial loses of both banks and the economy as a whole. If the main political forces manage to find a compromise in the near term, in 2014 the economy could resume growth of GDP, and banks will be able to expand crediting," the bank said on its Web site, citing Tsyplakov.

He said that if the political situation in the country remains tense in 2014, the National Bank of Ukraine (NBU) would have to extend the application of the administrative tools to stabilize the situation in the financial sector.

"The NBU could introduce temporary restrictions on the purchase of foreign currency by individuals to support the hryvnia exchange rate or the liability to present documents confirming the necessity to buy a certain sums of foreign currency, make checks of banks on the non-targeted use of the NBU's refinancing loans more frequent, and narrow the refinancing of banks to restrict speculators," he said.

He said that the measure to impose a ban on the early withdrawal of deposits was premature.

"The oOutflow of hyrvnia deposits in December will total no more than 1-2%. Deposits withdrawn early as a rule are converted in foreign currency deposits by depositors and the money is left in the banks. A risky level of outflow of deposits for the banking system is 15%," the banker said.

Commenting on the situation on the foreign currency market, Tsyplakov said that with the delayed confrontation between political forces the temporary devaluation of the hryvnia to UAH 8.35/$1 could be seen.

"If the confrontation between the government and opposition is delayed, certain speculation moods could be stirred up. One cannot say that the banking system is not ready for this. Banks additionally bring foreign currency to the country due to growing demand. In addition, a shortage of hryvnias is seen in the present situation, when some of hryvnias leave the market and the NBU restricts the channels of money printing. Another factor will support the hryvnia in the near term – before the New Year holidays the public will start selling foreign currency," the banker said.