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Weekly Lists
June 7, 2019 www.intellinews.com I Page 26
bne:Credit
Uncertainty over Ukrainian president’s authority to dissolve parliament hurts bond market, endangers debt repayments
Polish rate setters hold again as spike in inflation causes little stir
Ukrainian parliamentarians have challenged President Volodymyr Zelenskiy’s decision to dissolve parliament early in the Constitutional Court, which has increased uncertainty and unsettled investors into Ukraine’s bonds, said Raiffeisen Bank (RZB) in a note on June 5. As the chart shows, the recent rally in Ukraine's UAH denominated bonds amongst non-resident investors has slowed.
Zelenskiy ordered the dissolution of parliament during his inauguration speech, however, his authority to do so is open to question. The president has the right to dissolve parliament, but with some restrictions: he can't dissolve parliament six months before a general election; and if the ruling coalition collapses he has to give parliament one month to form a new coalition.
Poland’s Monetary Policy Council (MPC) left interest rates at their current record low of 1.5% on June 5, hinting once again that no tightening of monetary policy is currently on the cards.
Fast economic growth accompanied by only moderate inflation provides no premises for a change in monetary policy, was the tone of the MPC’s statement.
Poland’s CPI growth came in at 2.3% y/y in May, adding 0.1pp to the annual expansion recorded in April, Poland’s stats office GUS reported in a flash estimate earlier this month. The rate of expansion decelerated from 0.5pp the preceding month.
The World Bank now sees Turkey’s economy contracting 1% in 2019, according to the June issue of its twice-yearly Global Economic Prospects report released on May 4.
The international financial institution revised down its expectation by 2.6pp from the assessment given in the January issue of the report. Turkey’s debt-fuelled economy has suffered a painful hard landing, considering the 7.4% ‘warp drive’ expansion it experienced in 2017 and 2.6% growth rate (estimated by the World Bank, possi- bly subject to later revision) posted in 2018. In 2020, Turkish growth will come in at 3%, if the World Bank’s latest forecasting for 2020 proves correct.
Turkey set for 1% contraction in 2019 GDP, World Bank says