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A New Generation Takes Over…PM Honcharuk Vows to Double GDP Growth to 5-7%…Low-Interest Rates Will Create ‘East European Tiger’ in the 2020s…US Grads To Run Finance, Economy, Ag… New Infrastructure Minister Promises Private Freight Trains, Toll Highways, Concessions for Ports/Airports and, Maybe, Chinese Investment in Post Office
By James Brooke
🔵In a generational turn of the wheel, the youngest parliament in the history of Ukraine history elected the youngest prime minister in the history of Ukraine — Oleksiy Honcharuk, a 35-year-old free-market reformer. The Rada, with an average age of 41, approved a pro-business cabinet of almost all new faces. Volodymyr Fesenko, an analyst with Kyiv’s Penta think tank, told Reuter the new government is “the most liberal … in the history of Ukraine.”
🔵Setting an example for small government, the new Cabinet has 17 ministers – one third fewer than the 25 ministers of the outgoing Cabinet. Several ministries were merged. Near midnight, the new Rada voted to lift parliamentary immunity. A second, final vote is to be Tuesday.
Highlights of the day:
🔵With this new parliament, President Zelenskiy said: “Now the country will finally be able to switch to fifth gear.” In a call for action, he demanded: “The liberalization of the economy, the creation of a powerful investment magnet to attract foreign investment. Building a digital state in a smartphone, where queues at state institutions and hellish bureaucracy remain in the past. Elimination of raiding, monopolies, and smuggling. Gaining real energy independence, energy efficiency and solving tariff problems.”
🔵“A new generation has come to power,” Prime Minister Honcharuk told the Rada and the nation. Since 2015, Honcharuk, a lawyer by training, served as an advisor to Ukraine’s first deputy prime minister and was the director of the Better Regulation Delivery Office, an EU-funded consultancy dedicated to cutting red tape. Honcharuk was elected by 69% of parliamentarians present Thursday, 290 out of 418. In a recent interview with Novoe Vremya magazine, Honcharuk said he wants to make Ukraine “an Eastern European tiger.”
🔵Ukraine’s new Prime Minister called for doubling the economic growth rate. “This government faces the task of accelerating economic growth,” Honcharuk told lawmakers, noting that 10 million Ukrainians lived below the poverty line. “We need to grow, but not to grow by 2-3%, but, at a minimum, by 5-7%.” Honcharuk said talks will start in September with the IMF to “negotiate a new 3-4-year cooperation program.”
🔵Lower interest rates are key to economic growth in the 2020s, Honcharuk said. “Cheap lending is one of the tactical goals that we will set for ourselves in the near future,” he said. Today, Ukraine’s prime interest rate is 17%. Next year, Honcharuk says, he wants to see hryvnia home mortgage rates of 12-12%. “Interest rates on loans may fall this year,” he promised. “People will start doing business. It can start with construction and industry.”
