geopolitical risk ratings firm

Ukraine – Pressure for Results

Arseniy Yatsenyuk’s troubled tenure as prime minister came to an early end in April 2016, following a two-month standoff with President Petro Poroshenko, who concluded back in February that fresh leadership would be required to jump-start a stalled reform program that is crucial to unlocking billions of dollars in desperately needed financial assistance from the IMF. The reins of government were taken up by Volodymyr Groysman, the candidate endorsed by the president’s eponymous party, who won parliamentary confirmation with the support of the BPP, Yatsenyuk’s People’s Front, and a handful of unaffiliated lawmakers.
The change in leadership has temporarily staved off the threat of an early election that, given the decline in support for both the BPP and the People’s Front, would have contributed to significantly greater uncertainty at a time when economic stability hinges on sustaining some measure of market confidence. Approval of the new government’s program provides Groysman with a one-year grace period during which his administration will enjoy immunity from a confidence vote.
Ukraine has received $6.7 billion from the IMF under a $17.5 billion EFF loan agreement, but the Fund has not disbursed any loans in more than a year, owing to doubts that Yatsenyuk’s government was capable of meeting the conditions attached to the loans. The new administration unveiled a medium-term policy program in May that mirrors the reform agenda outlined in the EFF, but it remains an open question whether Groysman’s government is more capable than its predecessor of steering reform legislation through the fractured Parliament. Many skeptics have noted that it was Groysman, in his capacity as speaker in the Supreme Rada, who blocked the Yatsenyuk government’s proposed tax reforms.
Given the interest of Ukraine’s western allies in ensuring the survival of the Kiev government, which has become more acute as the volume of Russia’s saber rattling grows louder by the day, it is likely that the IMF will show some flexibility with regard to the government’s progress on implementation of the reforms. Indeed, the security threat posed by Russia arguably represents a bigger danger to Ukraine’s economic and political stability than the ineffectiveness of the government in Kiev. A renewed outbreak of fighting in the east would upend fiscal consolidation efforts and send investors running for the exits, triggering a renewed economic downturn. A debt crisis would become inevitable in the absence of additional multilateral financial support, even as security-related distractions dimmed the prospects for obtaining parliamentary approval of reforms.
[button]FREE SAMPLES[/button]


Moving beyond current opinions, a seasoned look into the most pressing issues affecting geopolitical risk today.


Interested in More Information?

This field is for validation purposes and should be left unchanged.

Free Sample Information Request

Before you download our free samples, please help us to serve you better by providing us information about yourself and your needs. The PRS Group will not share this information with anyone.

*= required information