- Appointment follows formation of new coalition, Yatsenyuk exit
- Prime minister's cabinet proposals approved by parliament
Ukraine’s parliament speaker was approved as prime minister in a bid to end a political crisis that’s threatened to trigger early elections and has jeopardized the flow of billions of dollars in international financing.
After weeks of deliberations among the dominant parties, Volodymyr Hroisman, an ally of President Petro Poroshenko, was confirmed by parliament Thursday as Arseniy Yatsenyuk’s replacement. He was nominated by a slimmed-down ruling coalition made up of the parties of Poroshenko and Yatsenyuk, plus independent lawmakers lured to achieve a majority.
Hroisman, 38, takes charge amid a volatile environment, with voters and Ukraine’s foreign backers losing patience over delays in fighting graft after a street revolution demanding European values. Stalled reforms prompted key administration officials to quit and the International Monetary Fund to halt a $17.5 billion bailout. While the economy is healing after an 18-month recession, the hryvnia has lost 6 percent against the dollar this year.
“The change of prime minister could allow stalled reforms to be restarted and the country’s frozen IMF deal to resume,” said Liza Ermolenko, an analyst at Capital Economics Ltd. in London. “It’s clear the current government’s position has become increasingly fragile. Support has declined dramatically.”
Ukrainian government bonds, which rallied the most in a month on Monday on optimism an agreement on a new government was close, kept gains after Hroisman’s appointment. The yield on debt due 2019 fell five basis points to 9.581 percent.
Hroisman, parliament speaker since November 2014, served previously as a deputy premier under Yatsenyuk. His appointment ahead of candidates such as outgoing Finance Minister Natalie Jaresko consolidates Poroshenko’s grip on power.
“Hroisman is a politician of a new generation,” Poroshenko told lawmakers before the vote. “He was a top manager for reforms and decentralization as deputy prime minister.”
While the motion to appoint Hroisman was carried 257-50 in the 450-seat house, 206 of the revamped coalition’s 227 deputies backed it. Support beyond that came from independent lawmakers and some close to former Kremlin-backed leader Viktor Yanukovych, who was ousted in 2014.
In a sign of the coalition’s fragility, new Parliament Speaker Andriy Parubiy needed three votes to get lawmakers to approve Hroisman’s governing program, which prioritizes restarting IMF cooperation. The alliance hasn’t been able to agree on a health minister.
“Finding the votes will be a greater challenge” for the coalition’s two parties, according to Eurasia Group analyst Alex Brideau, who says Ukraine will struggle to meet IMF obligations after receiving the next aid tranche. “It’s not even clear that they’ll be able to rely on their own membership to support the legislation the government proposes.”
Poroshenko has said $1 billion in U.S. loan guarantees will be approved once the cabinet is in place. More aid -- needed to boost foreign reserves -- should follow, including 600 million euros ($680 million) from the European Union and $1.7 billion from the IMF.
The EU said Hroisman’s appointment is “a crucial development at a time when new momentum in the country is badly needed.”
Hroisman’s government lineup was also approved by parliament. Oleksandr Danylyuk, deputy head of the presidential staff, takes the critical post of finance minister from U.S.-born Jaresko, a favorite among investors after she oversaw last year’s $15 billion debt restructuring. Ex-central bank Governor Stepan Kubiv becomes first deputy premier and economy minister. Presidential appointees at the defense and foreign ministries keep their jobs.
Poroshenko and Yatsenyuk arrived with a mission to bring European levels of transparency to the ex-Soviet republic after decades of misrule. Before infighting sank their partnership, Ukraine exited recession and signed a pact to end the armed conflict against pro-Russian separatists in its east.