On March 31, presidential elections took place in Ukraine. This time Ukrainians chose their leader among 39 candidates. Though, among the main candidates were President Petro Poroshenko, political veteran and ex-Prime Minister Yulia Tymoshenko, and political satirist and actor Volodymyr Zelenskiy who has run his first-ever presidential campaign. As a result, on April 30th the Central Election Commission announced Mr. Zelenskiy as a new President of Ukraine. He received almost 75% of votes.
Newcomer and the political outsider with no experience in public affairs Zelenskiy will start to lead the country in the nearest future. We gathered comments and thoughts of the multiple business representatives, opinion leaders on what to expect from the new president in terms of economy and business environment.
Marina Petrov, the director of the European Bank for Reconstruction and Development’s Ukraine office, told Kyiv Post that the bank plans to double its investments in Ukraine to $1 billion during 2019. She added that she sees investors ready to come to Ukraine, as long as the country doesn’t take any unexpected economic decisions that might scare them off. Petrov added that she expected Ukraine to continue cooperating with the IMF, whose review of Ukraine is coming up in May.
U.S. Ambassador to Ukraine Marie Yovanovitch told Interfax that U.S. government will continue to work on those things that are important both for the Ukrainian people and the United States, namely: the successful resolution of the conflict in the east of the country, a thriving economy and respect for the government of all citizens in accordance with the law.
Erik Nyman, Managing Partner at Capital Times (investment company) thinks that foreign investors should consider the win of Mr. Zelensky as a positive signal. He expects that quotes of the Ukrainian Eurobonds will grow and the currency market is going to settle down. “I personally support chose of Ukrainians and I hope the reputation for Mr. Zelensky will be more important than money and long-awaited reforms will be launched. The most useful are promises of the newly elected president about the opening of the land market, zero declaration and tax reform”, Erik Nayman says to Vesti.net.
Vitali Shapran, main expert of the National Bank of Ukraine believes that the financial environment of Ukraine is becoming apolitical and is sensitive more to economic rather than political factors. It is proof of well-worked reforms.
Tomas Fiala, head of Ukraine’s biggest investment bank, Dragon Capital told Interfax that today both extraneous and domestic investments in Ukraine are very low, totaling 1.2% and 17% of GDP, respectively, which puts the brakes on economic growth and keeps Ukraine lagging behind its western neighbors. He hopes that the new President and Ukrainian Parliament will direct their energies, first of all, towards establishing the rule of law, fighting corruption, and reducing the influence of oligarchs.
Tomas Fiala also commented situation to Bloomberg in terms of bonds spreads – if Poroshenko won, spreads would have tightened, if Tymoshenko won, spreads would have tightened by about 100 basis points. Today with the presidency of Zelensky it will depend on what role Abromavicius (former Minister of Economic Development and Trade of Ukraine) and Danilyuk (former Minister of Finance of Ukraine) play on his team. If they’re in control, spreads will tighten; if Kolomoisky people show up, they’ll widen.
Aivaras Abromavicius, a private equity investor of Lithuanian origin, former Minister of Economic Development and Trade of Ukraine told Bloomberg that today Ukraine has lack of political will. He expects that Zelensky could be that hope, that platform, whereby people with the necessary political will could get significant powers.
Andriy Kolodyuk, managing partner of AVentures Capital is convinced that investments in the market will not decline at least during this year. Investment market will grow if President provides investors with guarantees that their capital is safe in Ukraine. Talking about the market of privatization – it is not active today not because the enterprises are bad, though because particular government officials constrain processes.
Serhiy Fursa, a specialist of sales of debt securities at Dragon Capital told NV.ua that if the White House keeps “overseeing” the official Kyiv, the economy will stay unchanged. As long as the IMF’s program is active in the country, the economy will not be facing strong shocks, while its modest growth can back off. Wrap-up. Under the “weak President” scenario, the system of government will be slightly changing from the current parliamentary-presidential republic to the parliamentary republic where the powers of the head of the state will actually shrink even more.
According to economic expert Danylo Monin, encouraged by the first achievements of the President, the new investment may start flowing into the country. More than that, prices on raw materials will increase and in the third quarter of 2019 one should expect economic growth.
Ukraine is changing and transforming into the truly democratic European country with rule of law and a conscious approach to the election of the new president and government.
The joint letter of Donald Tusk, President of the European Council and Jean-Claude Juncker, President of the European Commission is a good proof of this.
On behalf of the European Union, they admit that election had a “strong attachment to democracy and the rule of law that the people of Ukraine have demonstrated throughout the electoral process”. They believe that this is a “major achievement in the complex political, economic and security environment, against the backdrop of continuous challenges to Ukraine’s territorial integrity”.
In general, despite concerns and uncertainty most of the experts do not see negative investment flows associated with the presidential race and look forward to seeing results of the election to parliament to take place at the end of October.