Morgan Stanley has reportedly recommended selling Ukrainian government bonds, Liga.net reports, citing a bank report for corporate subscribers. The multinational investment bank, one of the world’s largest, allegedly fears that the appointment of the new government in Ukraine on March 4 will expand the budget deficit, derail reforms and adversely affect cooperation with the International Monetary Fund, according to the client report. “We recommend selling Ukraine-2030 Eurobonds and buying Egypt-2031 bonds,” the report stated.
The investment bank lists multiple concerns relating specifically to this week’s cabinet reshuffle, and the resignation of Oleksiy Honcharuk as prime minister, and the subsequent appointment of Denis Shmygal. The cabinet has also lost several other prominent reformers, the investment bank said, directly naming former Finance Minister Oksana Markarova and former Economy Minister Timofey Milovanov.
Morgan Stanley also said that pressure on ex-Prosecutor General Ruslan Ryaboshapka and Head of the National Anti-corruption Bureau of Ukraine Artem Sytnik may mean a rollback on anti-corruption reforms, and that the new Minister of Finance Igor Umansky, in his previous statements, had questioned the need for cooperation between Ukraine and the IMF. Additionally, the bank said it had further concerns on Ukrainian economic policy moving forward. The last few days have seen government bonds drop as global stocks rallied, despite the coronavirus outbreak. However, Morgan Stanley’s reported investment advice on Ukraine is linked to perceived political instability.
More than half of the ministers in Prime Minister Denys Shmygal’s new government are fresh faces. The Verkhovna Rada of Ukraine on Wednesday approved the new government led by the relatively unknown politician, Shmygal, an accountant who has reportedly held 11 jobs in the last 16 years. One of his longest jobs was as a mid-level executive for the DTEK energy giant, owned by the billionaire oligarch Rinat Akhmetov. A full description of the new government ministers: Who’s who in Ukraine’s new Cabinet of Ministers.
Some Ukraine observers continue to express little confidence in the ministers selected for this new government. “The more I read about Zelensky’s new cabinet, the less I sleep,” writes Melinda Haring, deputy director at the Atlantic Council Eurasia Center. “Real reasons to worry (is) that new ministers don’t want to work with IMF…”
Timothy Ash, a London-based emerging markets analyst and expert on Ukraine, also expressed his frustration over the new government. “I think there is disbelief with this cabinet reshuffle,” he wrote in an op-ed for the Kyiv Post. “The general line I have heard is what is President Volodymyr Zelensky doing? Just to reiterate what I said upon Zelensky taking office last year: This guy has the best opportunity to enact transformational reform of any Ukrainian leader over the past 30 years.”
The government relaunch should have a strategic goal, the European Business Association in Kyiv has said in a statement. Business supports the desire of the Ukrainian president to form a professional government, and expresses the hope that the decision was made after thorough analysis and with a strategic goal, the EBA said in a statement to Ukrainian reporters. “In recent months, EBA member companies have engaged in a fairly constructive dialogue with most ministries and observed a prompt reaction to the appeals of the business community. So we really hope that the decision to restart the government, headed by Prime Minister Oleksiy Honcharuk, was made after a thorough analysis of all pros and cons and has a strategically sound goal,” the EBA said in a further comment to Interfax-Ukraine.
Business expects that the new government will be committed to reforms, other commerce associations have told Interfax-Ukraine. “Unpredictability, a change in the government’s strategy, is something that businesses would definitely not want. It is important for our… community that the reshuffling of the Cabinet of Ministers does not affect the implementation of systemic changes, and the path of reforms does not change. Business requirements remain unchanged – transparent, equal business conditions and predictability,” Executive Director of the Union of Ukrainian Entrepreneurs (SUP) Kateryna Glazkova told Interfax-Ukraine.
Large events will be prohibited in Ukraine amid the coronavirus outbreak, the deputy health minister has said.“Unfortunately, in the near future, we will be forced to introduce restrictive anti-epidemiological measures. We will prohibit holding of mass events, conferences, sports events, we will temporarily close schools for restrictive anti-epidemiological measures… to reduce the crowds, since we all know that the virus transmitted by airborne,” the minister, Dr. Viktor Liashko said, as reported by Interfax-Ukraine.
Two more Ukrainians have been hospitalized with suspected COVID-19 after visiting Italy. Two residents of Chernivtsi Oblast were taken to an infectious disease hospital on March 5 with suspected COVID-19, the regional state administration stated on Facebook.
Despite ambitions to become an exporter of natural gas, Ukraine has increased its gas imports by 37.6% this year. In January-February 2020, the country increased its imports of natural gas by 344 million cubic meters in comparison to last year, official data shows. The largest exporters to Ukraine were Slovakia, Hungary and Poland, Interfax-Ukraine said. Experts say that Ukraine has huge reserves of untapped natural gas onshore, and under its offshore Black Sea shelf, but needs foreign investors to help extract it.
