KYIV, Oct 27 – President Volodymyr Zelensky’s top security official has criticized the National Bank of Ukraine for high interest rates, a comment that may raise new concerns over political interference into its monetary policy.

Oleksiy Danylov, the secretary of the National Security and Defense Council, Zelensky’s top security body, said the interest rates are currently “unfair” to the country’s businesses.

"The interest rates in our banking system are completely unfair to businesses,” Danylov said in a recent interview with RBC-Ukraine. “Our businesses cannot compete with interest rates that exist in other countries.”

The comment comes less than a week after the NBU has decided to keep key interest rate unchanged at 8.5%, abruptly ending a streak of rate hikes this year in reaction to growing inflation.

Ukraine’s annual inflation was reported at 11% in September, compared with 5% target set by the NBU, and most market analysts expected the central bank to further raise the rate to contain inflation.

The NBU’s decision to keep the rate steady came two days after Bloomberg had reported Zelensky was seeking to replace NBU Governor Kyrylo Shevchenko. The report cited three people familiar with the plans.

Zelensky’s office later denied the plans.

Shevchenko, when asked on Oct. 21 whether he faced any political pressure, said the rate decision was based on “economic factors only.”

Danylov’s comments, however, indicate the NBU is facing political pressure to make the interest rates “fair,” a revelation that may trigger fresh concerns at the International Monetary Fund.

The IMF, in a statement last week, said Ukraine must safeguard central bank independence and “focus monetary policy on returning inflation to its target.”

The IMF is to decide next month on whether to disburse $700 million loan to Ukraine.

Danylov said: "If you are a businessman - try to go to a bank and take a loan. Try to go through these 10 rounds of hell, and you will be denied a loan in 95% of cases because this system is monopolized.”

“Today, the banking system itself does not work in the form in which it should work for our state,” Danylov said.

Shevchenko’s predecessor, Yakiv Smoliy, resigned in July 2020 citing political interference and pressure to loosen monetary policy. (nr/ez)