March 4, 2020 / 1:06 PM / a month ago

Ukraine president jettisons PM in search for 'new brains' to revive economy

KIEV (Reuters) - Ukraine’s president Volodymyr Zelenskiy ousted Oleksiy Honcharuk as prime minister after just six months in a reshuffle on Wednesday, saying that “new brains and new hearts” were required to revive the economy and tackle corruption.

Ukrainian President Volodymyr Zelenskiy delivers a speech during a parliamentary session in Kiev, Ukraine March 4, 2020. REUTERS/Valentyn Ogirenko

At a special parliament session, lawmakers voted to accept the resignation of Honcharuk, 35, who left as Ukraine’s youngest and most short-lived prime minister since independence in 1991.

He was replaced by Denys Shymgal, who said his immediate challenge was to stave off an economic and budget crisis. He wanted to revise the 2020 budget, cut the salaries of ministers and some officials, and also said the strong hryvnia currency had hurt exports.

The shake-up threw Ukraine’s commitment to reforms into focus at a time when it is trying to finalise a new loan programme with the International Monetary Fund that is seen as crucial to economic stability and investor confidence.

Other more experienced operators also joined the cabinet, signalling a change of direction for Zelenskiy, who was elected last year as an outsider who would bring new faces to politics.

Finance Minister Oksana Markarova was axed for Ihor Umansky, who was acting finance minister a decade ago under Prime Minister Yulia Tymoshenko.

Speaking before the vote, Zelenskiy criticised the government for failing to arrest an industrial slump and for being soft on tackling graft, while seeking to reassure Ukraine’s international partners of his commitment to reforms.

“Yes, indeed, this is the first government where there is no high-level corruption. But not stealing is not enough. This is a government of new faces, but faces are not enough,” Zelenskiy said. “New brains and new hearts are needed.”

PATCHY PROGRESS

Zelenskiy also took a swipe at foreigners being on the supervisory board of state-run firms - many of which were appointed with the backing of international donors - saying Ukrainian citizens felt like a minority on them.

An actor with no political experience who played a fictional president in a comedy series, Zelenskiy swept to power in a landslide win last year.

But his administration’s popularity has sagged after patchy progress on a commitment to end the war against Russian-backed separatists in the eastern Donbass region and to tackle graft.

Shmygal, the new prime minister, used to work for DTEK, Ukraine’s largest private energy group, owned by the country’s richest man, Rinat Akhmetov.

The new government “is radically different because we took into account society’s demand for professionals. We took people who are authorities in their fields,” Oleksandr Kachura, a lawmaker in Zelenskiy’s party, told Reuters.

“Previously, this was considered a drawback, but now it is perceived differently.”

Honcharuk’s position had been under scrutiny since the leak in January of a recording that suggested he had made unflattering comments about Zelenskiy.

Slideshow (6 Images)

His government also tussled with Ihor Kolomoisky, one of Ukraine’s wealthiest tycoons, who has been fighting to reverse the 2016 nationalisation of his former bank PrivatBank, the country’s largest lender. Zelenskiy, whose TV show became a hit on a station owned by Kolomoisky, denies that his business ties with the tycoon influence policy decisions.

In order to secure new IMF loans, Honcharuk’s government had tried to pass a law on banking insolvency that would bar PrivatBank from returning to Kolomoisky.

“This is a victory for Kolomoisky and his people,” a source in Zelenskiy’s party said of the cabinet overhaul.

Reporting by Pavel Polityuk, Ilya Zhegulev and Natalia Zinets; writing by Matthias Williams; Editing by Peter Graff, Nick Macfie and Alexander Smith

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