BLOOMBERG: Ukraine Turns to Blueprint That Transformed Ex-Communist Europe

Control of the legislature allow President Zelenskyy's party to pursue market-based economic policies that the likes of Poland and Hungary introduced two decades ago, even as those nations now seek more state sway

Michael Winfrey , Volodymyr Verbyany , and Daryna Krasnolutska
Monday, 05 August 2019 14:25

As some of the European Union‘s eastern members embrace more state-led economic models, Ukraine is turning to the playbook that helped rebuild the continent’s ex-communist wing back in the 1990s.

With help from the International Monetary Fund, President Volodymyr Zelenskiy wants to sell state companies, trim the budget deficit and relax rules for land ownership. The ideas have been floating around for years. But unlike the previous administration, this one may have more appetite to implement them.

According to Oleksiy Honcharuk, the 35-year-old head of Zelenskiy’s economic team, Ukraine is targeting a staff-level agreement with the IMF in September to replace the loan deal that expires at year-end.

“The IMF is our strategic partner,” he said last week in an interview in Kiev. “We definitely aim to get another program.”

Honcharuk’s comments helped Ukraine’s GDP-linked warrants rally for a 15th day. They gained to 85.85 cents, a record since they were issued in November 2015.

Zelenskiy, a TV comic and businessman with no political background, was elected this year in a landslide victory as voters lost patience with establishment politicians who failed to end endemic corruption.

As well as economic challenges, the country of 42 million people remains locked in a Kremlin-backed war near the border with Russia. Tensions fizzled again last week in the Black Sea.

After clinching the first parliamentary majority in Ukraine’s modern history this month, Zelenskiy’s party will form a government in August, said Honcharuk, who Ukrainian media say is a potential prime minister.

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