This is “a blow to reform efforts, as he was viewed as being an increasingly important part of the reform group within the administration.
“He is the second minister of economy to resign citing similar concerns from the (Prime Minister Arseniy) Yatsenyuk administration, but his leadership at the Ministry of Economy had been making some good progress in some key areas of reform, including deregulation, improving public procurement, et al.
“Privatization was the big priority for 2016 and this move might reflect frustrations building there – maybe he has been thinking of leaving for some time, and his comments are aimed at helping his successor relieve key bottlenecks.
“A cabinet reshuffle has been in the offing for a while, and this will likely pre-empt that.
“(President Petro) Poroshenko and Yatsenyuk will need to bring in a big, reform name/dynamo for this still important ministry. Pre-Christmas I think pressures and frustrations were building in the reform team, focused on the difficulties getting the budget and the revised tax code thru the Verkhovna Rada.
“They did, but if they had not passed larger scale resignations from the government and the National Bank of Ukraine were a risk.
“The question now is will we see a larger scale set of resignations, or will this be it for the time being.
“Many reform ministers have been getting increasingly frustrated with the slow pace of reform, particularly in rule-of-law related issues, and on the structural reform front.
“Slow progress, and low pay for ministers/officials is clearly weighing – many reformers joined the government, taking big pay cuts (working for next to no money) on the assumption the job would be for a relatively short period of time – perhaps a couple of years at most.
“But two years after Maydan and I think these same people are realizing that this will be a much longer haul due to entrenched vested interests, and I guess they are asking themselves can they commit/survive the pressures and frustrations that long.
“I guess there is concern if there are more good/capable people following on, and willing to pick up the baton.
“I think the market will now be focused/worried as to whether we see other key departures from the reform teams at the Ministry of Finance and the National Bank of Ukraine. As I said, Poroshenko and Yatsenyuk will now have to move quickly to stabilise the situation. A cabinet reshuffle was coming, but this move pre-empts that.”
