The newly appointed prime minister of Ukraine, Oleksiy Honcharuk, has outlined his government’s plans to journalists from six Ukrainian media outlets in a joint interview on Aug. 30.
The Ukrainian parliament — dominated by President Volodymyr Zelensky’s Servant of the People party — approved Honcharuk’s candidacy on Aug. 29. The lawmakers also appointed the new Cabinet of Ministers that same day.
It is the youngest government in Ukraine’s history. Most of the ministers are in their 30s and Honcharuk is just 35.
Moreover, both Zelensky and his party were swept into power on a wave of anti-establishment sentiment. As a result, the new Cabinet faces high public expectations to reform many fields, including taxes and healthcare.
Honcharuk said that the Cabinet will present its plan in parliament in a month. Until then, his interview offers a first look at the new prime minister’s opinions and goals in office.
Big on economic growth
Prior to being named prime minister, Honcharuk served as deputy head of Zelensky’s office overseeing economic development and reforms.
Before that, he was the head of the Better Regulation Delivery Office, a European Union-funded independent policy institute aimed at improving the business environment and state regulation in economic sectors. In the past, Honcharuk ran his own law firm and was an adviser to Minister of Economic Development and Trade Stepan Kubiv.
In the interview, Honcharuk said that the key to solving many of Ukraine’s issues is economic growth.
He suggested that Ukraine’s developed defense sector — critical for the country’s war with Russia — requires significantly more funding, something unavailable without growth.
“Therefore, the focus of this government will be economic growth,” Honcharuk said.
The prime minister also said that his government wants to make the Ukrainian economy more mobile to increase its resiliency to crises by reducing state regulation and carrying out privatization. For instance, Honcharuk said the Cabinet won’t influence the National Bank administratively, but will cooperate with it as partners.
Tax reform, amnesty
Honcharuk also announced that his government was preparing a tax reform that it will present in spring. It should come into force at the beginning of 2021.
However, the Honcharuk government has not settled on a modal of the tax system. It should be simple, so that “it doesn’t burden anyone,” the prime minister said.
The government’s first task related to taxes will be reducing large-scale tax evasion, including contraband smuggled into Ukraine.
“When you cannot trace the origin of a product in the country, you cannot provide the needed security and protect the consumer,” he said.
According to Honcharuk, billions of dollars of contradband goods enter Ukraine each year. He believes that Max Nefyodov, the young new head of the State Customs Service, will bring order to customs and stop contraband by the end of this year.
As for the short-term goals, Honcharuk says that his government’s main aim this fall is to establish order in the administration of taxes. For this, he “counts on” Finance Minister Oksana Markarova, who is one of the two ministers in the previous government to keep their post. Honcharuk called Markarova a “good manager.”
The prime minister didn’t say when his government plans to carry out a tax amnesty to bring unregistered businesses out of the shadows. However, he said it should be done only once after taking stock of the tax situation.
Infrastructure
Honcharuk said that the main priority for the Ministry of Infrastructure will be roads. According to the prime minister, Zelenksy told the ministry that this should be one of its first concerns.
Honcharuk said that the ministry is preparing a road strategy for the next year and the government plans to increase financing for road construction.
“If you invest in infrastructure, then that money goes back into the economy. And it brings in extra money,” he said.
Goncharuk said that there are 24,000 kilometers of main roads in Ukraine and all of them should be repaired or rebuilt over the next five years. The first one to be reconstructed will be the road to Mariupol, an industrial city of 450,000 people some 640 kilometers southeast of Kyiv. Construction work will be completed by Oct. 18, the prime minister said.
Healthcare, education reforms
Honcharuk said that the country has been moving in the right direction for the past five years, but that the process is going too slowly and many reforms have become entangled with corrupt private interests.
He described efforts to improve the healthcare and educational systems as two of the “right reforms,” but said there were issues with how they were managed.
“The idea is right, but we will look how they were implemented inside the ministries,” he told journalists.
Former Acting Health Minister Ulana Suprun, who left office just days ago, has worked on reforming healthcare since 2016. However, Suprun is a polarizing figure in Ukraine. Many Ukrainians claim that her reform will make healthcare inaccessible to them. Many others — including many reformers — believe that she is saving the country’s decaying, underfunded healthcare system. Few are indifferent.
In the past, Zelensky has criticized Suprun’s reform, raising concerns that his administration could undo her accomplishments. Honcharuk’s comments will likely reassure them that Ukraine will not abandon the changes implemented over the past three years.
Avakov
The second minister from the old Cabinet to keep his post was Arsen Avakov, who heads the Interior Ministry.
Avakov has been connected to several corruption scandals. In 2017, the National Anti-Corruption Bureau of Ukraine charged his son Oleksandr and Avakov’s ex-deputy, Serhiy Chebotar, with embezzling Hr 14 million ($557,000 at the current exchange rate) while supplying overpriced backpacks to the Interior Ministry.
Although many activists demanded that Avakov not keep his post, Zelensky and his party decided not to show him the door.
Honcharuk said that the Servant of the People faction in parliament made that decision. However, he also said that he shares the responsibility for that appointment since it is his government.
The prime minister said that both he and Zelensky talked to Avakov and established red lines that he should not cross.
Honcharuk believes that Avakov has failed at reforming the National Police, but played an important role in ensuring that the 2019 presidential and parliamentary elections were fair and transparent.
Nobody in the government will steal and, should Avakov prove to be ineffective, Honcharuk will initiate his dismissal, the prime minister said.
Local elections
While Zelensky has suggested he could initiate snap local elections this fall, Honcharuk doubts that will happen. After being inaugurated as president, Zelensky dispersed parliament and scheduled snap legislative elections for July 21. When the new parliament was inaugurated on Aug. 29, the president explicitly threatened to disperse the legislature in a year should it prove ineffective.
Honcharuk said that it is too late to announce local elections. Additionally, such a move would be complicated because the country’s decentralization reform has not yet finished: some villages and small towns have already formed larger amalgamated communities, but others have not.
IMF cooperation
Honcharuk said that the mission of the International Monetary Fund is expected to visit Ukraine on Sept. 10-24.
The years 2019 and 2020 will be very difficult for Ukraine because of the loans it must repay donors like the IMF, he said. A third of the state earnings will be used for this purpose.
As of the start of 2019, Ukraine had $78.3 billion in state debt.
However, Honcharuk is optimistic about the future. He believes that the country will be more effective in two to three years. Meanwhile, his government will also work to improve people’s living conditions today.
