Page 39 - Eastern Europe Outlook 2020

repayment jumped up. But between the $14bn of remittances from workers abroad and the booming domestic debt market, analysts are confident that Ukraine can meet its obligations in the coming years.
Gross international reserves (GIR) had risen to about $22bn by the end of 2019, or 3.4 months of import cover, and should increase again in 2020.
The International Monetary Fund (IMF) also signed off on a new $5.5bn Extended Fund Facility (EFF) in December (although this still needs to be approved by the board, which probably won’t happen until February) that will help pay off debt and gives Ukraine access to better terms on the international capital market. The Ministry of Finance raised $4.2bn on the bond markets in 2019 and plans to raise about the same in 2020.
There remains some uncertainty over closing the IMF deal thanks to oligarch Ihor Kolomoisky’s attempts to take back control of PrivatBank that was nationalised in December 2016, but the Zelenskiy administration has made it clear it will do what is necessary to ensure the IMF deal is closed although the wrangling over the terms could well drag on for most of the first quarter of 2020.
2.0​ ​Political outlook
Zelenskiy was swept to power in the April 2019 presidential elections taking 73% of the vote – a huge popular mandate to carry out his promise to bring peace to eastern Ukraine in the undeclared war with Russia in the Donbas.
Zelenskiy’s party Servant of the People (SOTP) then followed suit in the July general elections to take an absolute majority and gave Zelenskiy complete control of the political process. Ukraine has never had such a clear political set-up to push through long ignored reforms and it is widely agreed that this is the best chance Ukraine has ever had to fix its problems.
However, the honeymoon can’t last forever and as Zelenskiy started in on the real work of reforms his popularity fell somewhat, especially when the Rada pushed through laws to create a land market in 2020 that is on the IMF’s wish list. This reform was gutted to the extent that foreigners were excluded completely from participating, which will reduce the value of the land and also opens up the possibility of domestic oligarchs building up large holdings and monopolising the business.
Zelenskiy is still in test mode with the population who were inspired by his clean hands image and promises to address the issues that concerned them most. He passed his first test well with the Normandy Four meeting in Paris in December but Zelenskiy still runs the danger of failing to deliver on his promises and rapidly losing public support. 2020 will be a crucial year where the young administration will have to navigate between the need to revamp the economy and maintaining his political support.
And the president has passed his first real test. Zelenskiy’s popularity rose 9pp in December after the Paris summit from 53% to 62%, although it was down from over 70% in the summer shortly after the Servant of the People’s victory
39​ EASTERN EUROPE Outlook 2020​ ​ ​www.intellinews.com