Ukraine to make case for Cabinet rejig as another reformer quits

epa04916567 Ukrainian President Petro Poroshenko (L) speaks with the International Monetary Fund (IMF) Managing Director Christine Lagarde during their meeting in Kiev, Ukraine, 06 September 2015. Christine Lagarde is in Lagarde for meetings with various officials.  EPA/SERGEY DOLZHENKO


The political crisis roiling Ukraine’s post- revolution leaders is coming to a head after the International Monetary Fund threatened to cut off aid and another top reformer quit. If efforts to revamp the cabinet fail, the risk is early elections.
PM ArseniyYatsenyuk is set to report to parliament this week on government performance, with proposed personnel changes to follow. While President Petro Poroshenko has vowed to “reboot” the cabinet and jump-start reforms, two small coalition parties want the premier to step down and one has called for a snap ballot. Adding to friction, a senior Ukrainian prosecutor resigned on Monday, accusing his boss of graft. His exit follows that of the economy minister this month amid similar accusations.
Poroshenko and his team were brought to power after a popular uprising with a mission to bring European levels of transparency to the former Soviet republic after decades of misrule. While much of their two years in office was spent tackling a recession and a pro-Russian insurgency that’s killed 9,000 people, voters and Ukraine’s foreign backers are fed up with delays in fighting corruption. The hryvnia has lost 9 percent this year.
“I don’t think the reshuffle is enough,” Lutz Roehmeyer, director of fund management at Landesbank Berlin GmbH, said by e-mail. “Early elections are unfortunately still possible. Foreign investors thought that this is the one and only chance to reform the country but now it seems that Ukraine falls back into old political behavior.”
While investors have taken some comfort from recent efforts by Poroshenko to bolster coalition unity and reaffirm Ukraine’s commitment to reform, yields on government debt due 2019 remain almost 2.5 percentage points higher than when they were issued in November after a $15 billion restructuring. Warrants that pay out if expansion in gross domestic product exceeds 3 percent starting 2019 have lost almost a third of their value.
Already dogged by infighting that delayed passage of the budget and held up disbursement of Ukraine’s $17.5 billion IMF loan, coalition tensions spilled over this month when Economy Minister AivarasAbromavicius quit, alleging corruption inside the president’s party. IMF chief Christine Lagarde added to the pressure last week, saying it’s “hard to see” the bailout continuing without “substantial” reform and anti-graft efforts. Ukraine’s corruption perceptions ranking at Transparency International barely budged last year.
In another blow to Ukraine’s anti-graft ambitions, Deputy Prosecutor General VitaliyKasko submitted his resignation Monday, saying in a webcast that Prosecutor General Viktor Shokin has blocked corruption investigations and reform. Poroshenko, who appointed Shokin, has resisted calls to oust him despite a lack of progress to solve the murders of protesters in 2014 and recover funds allegedly embezzled by former officials.
“The Prosecutor General’s top officials have completed the job of making it the office of corruption and covering each other’s backs,” Kasko said. “Any attempt to change the situation inside the office is halted at once.”
No one answered calls to the Prosecutor General’s press service seeking comment.
To ease the political crisis, Poroshenko’s is proposing a new reform schedule with the IMF and a cabinet overhaul, retaining reformers such as Finance Minister Natalie Jaresko. The plan is preferable to early elections as support for the parties of the president and the prime minister has tumbled: Yatsenyuk’s People’s Front is polling at less than 1 percent. Backing for the coalition’s two smallest parties — Samopomich and ex-Premier YuliaTymoshenko’sBatkivschyna — has risen.

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