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Ukraine approves new PM in bid to end reform deadlock

Newly-appointed Ukrainian Prime Minister Groysman holds flowers at the parliament in Kiev

By Pavel Polityuk and Natalia Zinets

Ukraine’s parliament approved presidential ally Volodymyr Groysman as prime minister on Thursday in the biggest political shake-up since a 2014 uprising brought in a pro-Western leadership.

President Petro Poroshenko hopes the appointment of the former parliamentary speaker will end months of political deadlock that has delayed billions of dollars in foreign loans to shore up Ukraine’s war-battered economy.

But the departure from the cabinet of experienced technocrats who led strategic talks with Western lenders and investors, including US-born Finance Minister Natalia Yaresko, has rattled pro-European reformists. Some deputies said the new government would struggle to get laws approved.

Speaking ahead of the vote, Groysman, 38, said his government was committed to tackling corruption and strengthening ties with the European Union.

“I understand the threats that face us. In particular I would like to highlight three threats – corruption, ineffective governance and populism, which do not pose less of a threat than the enemy in eastern Ukraine,” he said, referring to the conflict with pro-Russian separatists.

A new government should allow talks to resume on the disbursement of a third tranche of loans from the International Monetary Fund worth $1.7 billion, delayed since October. The funds are needed to shore up foreign reserves and defend the hryvnia currency, which lost about a third of its value in 2015.

Ukrainian bonds firmed after the vote in parliament.

Groysman’s rebooted cabinet appears to strengthen the influence of Poroshenko in the government and on the economic side of policymaking in particular.

Oleksandr Danylyuk, 40, who is set to become finance minister, is the deputy head of Poroshenko’s administration, while the economy minister and first deputy prime minister positions will be given to Stepan Kubiv, who is currently the president’s representative in parliament.

They replace Yaresko, praised by Washington for her handling of Ukraine’s debt crisis, and ex-economy minister Aivaras Abromavicius, who spearheaded a drive to privatise graft-ridden state firms, but quit in protest over corruption in February.

Poroshenko, whose confectionary business Roshen has made him Ukraine’s sixth richest man, said the new government must honour reform commitments made under its $17.5 billion IMF bailout.

“I stress the imperative and inviolable necessity of continuing cooperation with the IMF and other international lenders,” he said.

However, former coalition members have joined the opposition, prompting lawmakers to question whether the government will have sufficient votes to pass critical reforms or laws to underpin the fragile peace deal in eastern Ukraine.

“It means the government will only last for a few months at most, afterwards the president will be forced to dissolve parliament,” said Opposition Bloc lawmaker Serhiy Lyovochkin.

Ukraine’s Western allies fear a snap election could boost populist parties who oppose IMF-led austerity measures to save an economy emerging from two years of recession.

Groysman replaces Arseny Yatseniuk, who was appointed after the ‘Maidan’ street protests that ousted Russia-backed president Viktor Yanukovich. His popularity fell into the low single digits, partly due to public perceptions that his government did too little to hold powerful oligarchs to account.

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