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2014–2016,” the NBU said in a tweet. The NBU has been fighting a running legal battle with Kolomoisky who has launched a blizzard of lawsuits against the NBU and the new state-owned PrivatBank in his attempt to get the latter back. There have also been fire-bombings and violent attacks on the central bank staff and their property that the NBU has branded a “terror” campaign and named Kolomoisky as the instigator.
Rada deputies associated with the oligarch introduced over 16,000 amendments to the banking bill after it passed the first reading on March 30, but the need to read them all was circumnavigated by the introduction and passage of a new law that allows deputies to consider amendments in bulk.
The downgrade to an SBA from the EFF was also motivated by the need for speed, as an SBA is a simpler deal to approve than an EFF that comes with more strings. While the approval of the previous EFF deal was made contingent on new legislation, the approval of this week’s SBA has no strings attached to it and the IMF’s board is expected to approve the deal in the coming week.
“The President @ZelenskyyUa has signed the banking law aimed at improving regulations in the banking sector. The law is the last remaining prior action needed for Ukraine’s new IMF Program,” Ukraine’s finance ministry said in a tweet after the IMF’s announcement.
The IMF deal is of crucial importance to Ukraine, which faced a debilitating default and crisis that would have condemned the country to years of poverty and pain if it had not been adopted. Analysts noted that Ukraine cannot meet its debt obligations without the IMF’s help.
Stuck between a rock and a hard place, the need to reach an agreement with the IMF has forced Zelenskiy to take a stand against Kolomoisky and he has pushed for a deal to be done. On the day of the second reading of the banking bill the president went to the Rada building to lobby deputies to vote for the bill. He also rallied the opposition, and his nemesis former president Petro Poroshenko and his party in particular, in order to raise enough votes for the bill to pass.
In the end the bill was supported by 270 MPs, surpassing the required 226 votes and more than the 246 votes that Zelenskiy’s Servant of the People (SOTP) party commands in parliament. About a dozen members of Zelenskiy’s party are loyal to Kolomoisky and rebelled against Zelenskiy in order to vote for the banking bill. One of the results of this saga is Zelenskiy has de facto lost his majority in the Rada and will have to do deals with opposition parties to get more reformist legislation passed.
Foreign investors have been anticipating the deal after the banking law was passed and Ukraine’s yields have fallen back to the same levels as last year after spiking in March and April as fears of a sovereign default grew. The Ministry of Finance raised some $800mn in its weekly bond auction on May 19 as investors are returning to the high-yielding market.
Even with the IMF deal in place analysts estimate that Ukraine will need to raise at least $10bn on international and domestic capital markets this year to meet its debt repayment obligations and cover a very large increase in the deficit spending to counteract the effects of the coronavirus economic
10 UKRAINE Country Report June 2020 www.intellinews.com
