Ukraine Turns to Government Revamp After Prosecutor's Exit

  • Parties meeting in Kiev to discuss new ruling coalition
  • Alliance will then decide on cabinet revamp to restart IMF aid

Ukrainian politicians turned their attention to revamping the government and ending months of uncertainty after parliament approved the departure of the nation’s chief prosecutor.

Talks among party officials to decide on a new ruling coalition and changes to the cabinet stretched into Tuesday evening in the capital, Kiev. Earlier, lawmakers backed the departure of Viktor Shokin, who’d been asked to resign over a lack of results in tackling corruption. President Petro Poroshenko is seeking a resolution to the political quagmire before an official visit to Washington. Oleksiy Honcharenko, a Poroshenko lawmaker, said progress is still possible tonight.

Tuesday’s session in parliament, which may also vote on a new prime minister, is “critically important,” Kiev-based investment bank Dragon Capital said in an e-mailed note to clients. “Poroshenko’s trip to the U.S. on Wednesday is an expediting factor.”

Ukraine’s government has splintered over efforts to fight graft and reform the economy after decades of misrule. Stalled reforms have enraged voters and halted a $17.5 billion bailout from the International Monetary Fund. Political uncertainty is clouding the outlook for a recovery from recession and complicating peace talks over the conflict with pro-Russian insurgents in Ukraine’s easternmost regions.

Assets Weaken

Ukrainian government bonds and the nation’s currency weakened. The yield on debt due 2019 rose seven basis points to 9.90 percent after increasing by two basis points last week. The hryvnia, which has lost 8.8 percent against the dollar this year, slipped 0.6 percent, data compiled by Bloomberg showed.

Parliament Speaker Volodymyr Hroisman has been nominated to replace Prime Minister Arseniy Yatsenyuk in a bid to end Ukraine’s political tumult and restart the flow of financial aid. While backed by Poroshenko, Hroisman is struggling to assemble a parliamentary majority as parties bicker over his candidacy. A new parliamentary coalition may be formed from the parties of Poroshenko, Yatsenyuk and ex-Premier Yulia Tymoshenko, according to Hroisman.

Tymoshenko said Tuesday day that her Batkivshchyna party, which has 19 lawmakers, would only join the coalition if parliament backs a reduction in utility tariffs and the prolongation of a moratorium on the sale of farm land. The president’s and prime minister’s parties have set up a working group to help form a new coalition, according to Maksym Burbak, who heads Yatsenyuk’s party in parliament. A deal is possible on March 31, he said.

Recession, War

Poroshenko and Yatsenyuk emerged to lead Ukraine after a popular uprising two years ago ousted the country’s Kremlin-backed president, Viktor Yanukovych. Before being struck by infighting, the administration guided Ukraine out of recession, restructured $15 billion of debt and signed a pact to end the armed conflict against pro-Russian separatists in the country’s easternmost regions.

Under pressure from voters and foreign donors, Poroshenko asked Shokin, 63, to step down last month. Ukraine’s third chief prosecutor since 2014, Shokin returned to work March 16 after a monthlong holiday during which parliament failed to vote on his exit. Just before leaving, he fired his first deputy, Georgian-born Davit Sakvarelidze, hired to help modernize the prosecutor’s office having done similar work initiative in his homeland.

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