Ukraine president gains from economic data and policy

Significance

The decision to reduce gas prices -- a gift to President-elect Volodymyr Zelensky, as it chimes with the anti-austerity messaging of his election campaign -- and not to raise them as the IMF wants, was officially announced on April 24. However, it was outlined by Prime Minister Volodymyr Groisman in March, before the election. Zelensky inherits an economy in recovery, although last year's growth rate was mostly due to maize, sunflower seed and little else. He has not yet articulated an economic programme, but his team is promising constructive engagement with the IMF, soothing concerns about anti-austerity populism.

Impacts

• The disruption of supply chains and maritime freight mean Ukraine's economy will take years to return to 2013 levels.
• IMF support for monetary and financial restraint will encourage reformers in Moldova and other post-Soviet states to craft similar policies.
• With the advantage of monetary stability, the government is likely to use Eurobonds to restructure and service its foreign debt.