Ukraine's bankers stole UAH58bn from their banks in 2014-2015, state refunds to depositors of bankrupt banks were equivalent to 10% of total budget revenues, while total losses from bank insolvencies comprised 9% of GDP. These are just some of the disastrous figures Valery Gontareva, head of the National Bank of Ukraine, intended to tell Ukraine's parliament on March 6 in a speech.

But rowdy behaviour from deputies from populist Oleh Lyashko's Radical Party, professing outrage at the meltdown of the hryvnia, brought Gontareva close to tears. Pressing in around her on the tribune and chanting "shame, shame!" and "resign, resign!'"they forced her to abort the speech, which she later published online.

Ukraine's banking system continues to be wracked by fraud, Gontareva had intended to tell the unruly deputies. Indeed she even wanted to thank them for a new law passed on March 2 increasing the liability of bank owners and managers for damage to depositors and the state.

Since 2014, illegal actions by shareholders and managers caused a total of UAH58bn losses ($2.5bn), prompting 239 criminal investigations, she wrote in the speech.

Gontareva blamed “the actions of owners of banks which have been removed from the market” for the recent wave of devaluation, alongside psychological factors such as the war in East Ukraine and statements by populist politicians.

“If we had had such an instrument [as the new law] earlier, the amount [stolen] would have been significantly less, since shareholders and managers would have to think twice before siphoning off assets and blaming [subsequent insolvency] on the crisis,” she wrote in the prepared speech.

A total of 44 banks have gone bust since 2014, she added, forcing the government to pay out UAH50bn ($2.1bn) to retail depositors covered by the state individual depositors' insurance fund – a sum equal to 10% of total state revenues, she said. Total losses arising from insolvencies since 2014 run to UAH200bn ($0.85bn), or 9% of GDP.

On March 3, the NBU announced the insolvency of Ukraine's fourth largest bank, Delta Bank, after the bank had followed a "high-risk expansions strategy", according to the NBU.

Outright theft from the banking system is only one part of the problem, Gontareva wrote in the speech. Ukraine's banking system has been hit by massive deposit outflow since 2014. On one day alone, February 23 2015, depositors withdrew UAH2.2bn ($100mn) in savings, apparently converting most of this to dollars, causing the currency to crash, and forcing the NBU to effectively close the interbank market and freeze the exchange rate.

Gontareva said that depositors had withdrawn UAH126bn ($5.41bn) in 2014, with the outflow continuing unabated in 2015. Depositors withdrew UAH18bn ($0.7bn) in the first two months of this year, she said.

This despite the fact that the NBU prohibits banks from selling more than UAH3,000 ($130) to individuals per day, or paying more than the equivalent of UAH15,000 ($650) per day to depositors on foreign currency accounts, both of which measures are designed to slow the mass conversion of bank accounts into hard currency cash.

“This outflow is largely the result of panic, and we cannot fail to help banks meet their legal obligations towards people – to return them their savings,” Gontareva said.

This means the NBU has to provide refinancing loans to banks, but it does so sparingly and transparently, Gontareva assured, saying that it was natural that the bulk of the refinancing went to “the largest bank in the country, with 26% of all deposits", meaning Privat Bank, owned by aviation-to-oil oligarch, and governor of Dnipropetrovsk region, Ihor Kolomoisky.

She also denied that refinancing loans had been used by the recipient banks to speculate on the forex market, thus putting pressure on the hryvnia rate to the dollar. “The volumes of refinancing [loans] have not put any pressure on the forex or financial markets,” she said. “Each hryvnia of refinancing loans given to banks currently gets directed straight to deposit outflows – the NBU exerts strict control over this – every bank that received refinancing is supervised by a curator from the NBU,” she wrote.

Gontareva confirmed that Ukraine is now running on empty until a new IMF rescue package arrives, with March 11 expected to be the red letter day. The day before her intended speech, the NBU announced that reserves had dropped 12.4% on the month to only $5.6bn, less than three weeks import cover, after spending around $1.2bn on debt service and forex interventions.

This follows a 63% drop in international reserves through 2014. “Gross international reserves are falling much stronger than we expected, with steady, high forex interventions as the main reason,” writes Oleksandr Paraschiy of Concorde Capital.

While Gontareva intended to reassure parliament on the outlook for 2015, an economic forecast published by the government on March 5 made her task more difficult. According to the government forecast, the best case scenario for 2015 is a GDP contraction of 5.5% and inflation at 26.7%; the worst case scenario predicts an 11.9% GDP drop and 42.8% inflation, with continued GDP collapse of 7% in 2016 and 3% in 2017. “We believe the worst case is only possible should the situation in the eastern regions escalate and the cabinet make serious mistakes, such as authorising heavy printing for fiscal needs, which could trigger hyperinflation,” notes Paraschiy.

Ironically, given that Gontareva's speech was aborted under pressure of populist critics such as Oleh Lyashko, part of the speech aimed to protest against the very populism of those who criticise the NBU whatever it does.

“They accuse us of giving banks too many refinancing loans, and then declare that we are destroying the banking system by not give enough loans (...) They say we have abandoned the forex market to its fate, and at the same time blame us for not letting the market reach equilibrium. (..) They blame us for not controlling the forex market and then shout that the NBU has imposed such restrictions that the forex market cannot function,” Gontareva lamented in the written version of the speech that populists did not allow her to make.