Page 11 - UKRRptJul20

A slow recovery is bad news for holders of the Ukrainian government’s GDP warrants -- instruments issued as part of a 2015 debt restructuring that reward investors when economic expansion tops 3%. Even so, the warrants have surged more than 75% since mid-March after earlier losing more than half their value, buoyed by rallies in global asset prices and the state bonds to, which their price is linked.
The first review of the IMF program is planned for September, according to the memorandum signed between the two parties.
Ukraine is targeting $3.5bn from the loan this year, which the lender says would require the government to increase anti-corruption efforts and broaden the tax base. It must also work to recover cash from failed banks and hold their former shareholders accountable. The most notable is Privatbank, the country’s biggest, whose billionaire ex-owner Igor Kolomoisky has sought to reverse its nationalization.
“Despite some initial successes under recent IMF-supported programs, reforms increasingly faced resistance from vested interests, and court rulings undermined reform progress, especially in tackling corruption and financial-sector reforms,” the IMF said. “As a result, investment, and notably foreign direct investment, continued to be held back by a difficult business environment, and growth was too low to noticeably close the income gap with Ukraine’s peers.”
2.6​ ​Rada rejects government’s detail action plan
Ukraine's parliament rejected at its June 18 session the government’s latest draft of its program of activity​, the approval of, which would have granted the cabinet political immunity on a formal basis for one year.
The program, presented a second time by PM Shmyhal, drew only 207 votes compared to 226 needed, most of, which came from the pro-presidential People’s Servant party. It drew no votes from the parliament’s four other factions, whose MPs called for the cabinet’s dismissal for various reasons and gathered signatures for its dismissal. Among the main criticisms was the ongoing presence of the scandalous Arsen Avakov as internal affairs minister.
When presenting the first draft on June 4, Shmyhal requested that parliament vote to require its reworking. The draft presented on June 18 was expanded to 85 pages (many programs in the past had no more than 10 pages), organized around each ministry and planned for a 2020 GDP drop of 4-8%. As his response to the vote, Shmyhal issued a statement on the cabinet website shrugging off the parliament’s rejection and stating the cabinet will work on the program regardless.
“The cabinet’s program of activity is largely a formality that serves as a general barometer for the political climate in the country and a general guide for the government’s plans. It doesn’t even guarantee immunity, as the previous prime minister, Oleksiy Honcharuk, enjoyed the approval of what was considered by experts to be among the best programs drafted by a cabinet. Yet he was removed just six months into his tenure – through political pressure – without the need for a parliamentary vote,” Zenon Zawada of Concorde Capital said in
11​ UKRAINE Country Report​ July 2020 ​ ​www.intellinews.com