KYIV. April 18 (Interfax-Ukraine) – International investors will monitor the reaction of western financial donors of Ukraine to the first steps of the new government, experts of investment banks polled by Interfax-Ukraine have said.
“We think expectations were depressed by the political crisis, inability to tame corruption, delayed reforms etc. So, investors will monitor closely the first steps of the new government and the feedback from western partners/IMF,” Senior Economist at ING Bank in Russia and CIS Dmitri Polevoy said.
“The list of questions remains unchanged: stabilizing domestic politics, fighting corruption, delivering fully on the promises about reforms (the delayed tariffs hike and the new tax code are one of the several examples), restoring economic growth, Minsk-II process,” the expert said.
Polevoy said that politics will remain in investors focus.
“The recent reshuffling doesn’t solve the fundamental issue of falling approval ratings of President and ex-PM parties and rising support of other parties (Samopomich, Batkivschyna and Opposition Bloc), fuelling their political ambitions and calls for early parliamentary elections. Fundamentally, parliament is misaligned with the current political preferences of the population,” he said.
Sberbank CIB Investment Research Analyst Alexander Golynskiy said that in the short term, the key questions are the stability of the new government and coalition and the resumption the external financing that has been halted. The potential change of the parameters of the IMF’s cooperation with Kyiv is also a source for concerns.
In the mid-term and long-term, investors will seek political stability and the new government and Verkhovna Rada’s stance on reforms and, consequently, chances for the external financing and economic growth.
“We think that a Groysman-led government would be likely to move towards bringing the IMF program back on track, risks are arguably greater than under a Yatseniuk-led one, given the lack of track record and lack of clarity on Groysman’s policy views on utility tariff increases,” Goldman Sachs Analyst Andrew Matheny said.
