Ukraine FM dismisses pessimist critics as dedicated followers of fashion

Ukrainian finance minister Oleksandr Danylyuk uses an interview with GlobalMarkets to take on the country's critics, insisting that it has not only dealt with the challenges but has managed to implement tough reforms

  • By Virginia Furness
  • 14 Oct 2017
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Danylyuk: implemented reforms
Ukraine has no intention of easing up on its reform agenda as it heads towards presidential and parliamentary elections in 2019, Oleksandr Danylyuk, minister of finance, told GlobalMarkets, quipping that “pessimism is fashionable”.
However his comments came in the face of continued scepticism among market experts who doubt that the political will for change is there. 

Ukraine has made remarkable efforts in reforms delivered in the energy sector, banking industry, as well as fiscal adjustment and a $3bn bond market return, while GDP growth was back up to 2.4% year on year in the second quarter. 
“We achieved this despite a very aggressive external environment — military and economic war from our largest economic partner Russia, volatile external markets — we have not just survived but managed to implement reforms that many countries will need years to enact.”

But investors remain concerned that political attention is turning to the 2019 elections, and away from the reforms necessary to meet IMF requirements. “I have my doubts,” said Tim Ash, senior EM sovereign strategist at BlueBay Asset Management.

“I think that President [Petro] Poroshenko is now focused on re-election. There is less willingness to do some of the less politically popular things but which are now crucial. True, pension reform was passed but the bill was still revised [and] watered down and I am not sure it is IMF-compliant as yet.”
Reform of Ukraine’s pension law, as well as sustainable gas pricing, have become a critical condition for the fourth review of the IMF’s funding programme, and looked ready to delay the disbursement until 2018. 
But Danylyuk said the pension reform was a “great success” and that the IMF disbursement would be received this year. 

Privatisation programme

Regardless of the recent slowdown, Ukraine has made impressive progress in a country which is still being cannibalised by its larger neighbour. The country is on track to maintain a budget deficit of 3%. 
Danylyuk is working on several other key reforms including improving the process for privatisation which he said was “enormously important,” and has sent a draft law for its first reading next week. The existing legislation is complicated, and led to the failure of Ukraine’s attempts to privatise its Odessa Portside plant last year.
Should this bill be passed, Ukraine’s privatisation programme could bring in H22bn ($823.7m) in 2018, and H25bn in 2019. He is also looking to access some of the H350bn tax gap, and to establish a new financial police. 
But even he reluctantly acknowledges the stumbling blocks ahead. “The main obstacle is political process — parliament — they need to adopt laws on privatisation and land reforms,” he said.

  • By Virginia Furness
  • 14 Oct 2017

All International Bonds

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1 JPMorgan 223,845.04 1008 8.25%
2 Citi 208,986.58 875 7.70%
3 Bank of America Merrill Lynch 172,744.49 728 6.37%
4 Barclays 162,671.16 665 6.00%
5 HSBC 134,855.94 732 4.97%

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1 BNP Paribas 27,275.91 109 7.92%
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3 JPMorgan 21,834.93 53 6.34%
4 Bank of America Merrill Lynch 21,222.68 53 6.16%
5 SG Corporate & Investment Banking 16,639.52 78 4.83%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
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1 JPMorgan 7,363.27 46 9.58%
2 Morgan Stanley 7,283.40 35 9.48%
3 Goldman Sachs 6,842.44 35 8.90%
4 Citi 5,763.97 41 7.50%
5 UBS 4,691.07 23 6.11%