January 18, 2018 / 5:24 PM / 9 months ago

UPDATE 1-Ukraine president nominates central bank's Smoliy to be governor full-time

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KIEV, Jan 18 (Reuters) - Ukrainian President Petro Poroshenko has nominated acting central bank chief Yakiv Smoliy to be governor on a permanent basis, parliament’s website showed on Thursday, ending months of uncertainty over the highly-politicised position.

It is Poroshenko’s duty to choose a central bank chief. But his delay in putting forward a candidate following the resignation of the former governor in May has caused concern to Ukraine’s backers including the International Monetary Fund.

The president’s choice needs to be approved by parliament. Lawmakers might debate the issue on Friday - their final session before a three-week recess.

Smoliy, 56, has 26 years of experience behind him in the banking sector, including as deputy governor during the bank’s modernisation drive following a pro-Europe uprising in 2013-14, and is seen as a safe pair of hands.

Nevertheless, his limited political experience could work against him as he tries to juggle commitments to external creditors while meeting pushback from populist factions in parliament.

As Valeriia Gontareva’s deputy, Smoliy witnessed the opposition she met from lawmakers who disagreed with Western-backed austerity measures aimed at shoring up the graft-ridden economy.

When she resigned, Gontareva called for the central bank to stay independent, saying she believed resistance to change and reforms would increase.

Under Smoliy’s interim stewardship, the central bank has continued to highlight the importance of Ukraine sticking with its $17.5 billion IMF programme.

A key task for Smoliy as governor will be to take steps to rein in stubbornly high inflation. He will also need to work with the finance ministry and international financial institutions to help formulate a strategy on state-owned bank reform. (Reporting by Natalia Zinets and Alessandra Prentice; Editing by Richard Balmforth)

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