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Week's balance: Zelensky promises to continue "Big Construction", Rada reshuffles three ministers, and Cabinet abandons gas price regulation

16:59, 23 May 2021
5 min. 1147

At a press conference on the two years of tenure, President Volodymyr Zelensky vowed to extend the Big Construction state program, the Verkhovna Rada changed three key ministers, and the Cabinet decided to abandon state regulation of gas prices for thermal generation firms – these are the key economic developments of the outgoing week.

The third week of May was marked by a big press conference delivered by Ukrainian President Volodymyr Zelensky on the two years in office. The guarantor of the Constitution spoke about his main achievements and priorities for the future.

In particular, Zelensky promised to continue active modernization of infrastructure and complete the Big Construction program only when "everything is done" in Ukraine in this regard.

He emphasized that this program is constantly expanding and set to be supplemented this year by the Big Restoration program, aimed to focus on cultural heritage sites.

The President also assured that by the end of his term of office he will be able to end the "era of corruption."

"Regarding corruption, we are purging verticals. These verticals are in place in every institution of our state. We have launched the end of this era. And I will definitely complete it," the president noted.

Zelensky touched upon topic of vaccination for coronavirus, explaining why Ukraine is an outsider in this regard.

"Ukraine is an outsider in terms of vaccination. We all must understand that we have made 1 million vaccinations, we are not part of the European Union, we are not a NATO Ally, we are not a priority for the EU in terms of the queues for the supply of certain vaccines, and you must understand this," the president said.

At the same time, the head of state expressed confidence that as soon as the epidemic situation in India improves, Ukraine will receive 10-15 million doses of vaccines for COVID-19.

Reshuffle in key ministries

Last week, the Verkhovna Rada completed a blitz reshuffle in the country's Cabinet of Ministers.

Parliamentarians relieved of their posts economy minister Ihor Petrashko, infrastructure chief Vladyslav Kryklii, and minister of health Maksym Stepanov.

Reports say it was President Zelensky who decided that Kryklii and Petrashko needed to resign, while the officials, in turn, wrote the relevant resignation letters, and pro-president ruling faction in parliament, Servant of the People, promptly approved the moves.

By the way, Stepanov refused to write a letter of resignation and decided to try and defend his right to remain part of the government team.

"I didn't write any letter of resignation, because I feel responsibility before our people," the Minister of Health said at the onset of the row.

Seeing that the situation is spinning out of control, PM Shmyhal intervened to initiate Stepanov's dismissal before the Verkhovna Rada. Stepanov's address to Parliament did not convince the deputies to side with him, and on Tuesday MPs eventually fired Stapanov.

Grounds for Cabinet resignations

President Volodymyr Zelensky at his press conference commented on the high-profile Cabinet reshuffles.

He emphasized that "he does not have many questions to the ex-minister of infrastructure”: Kryklii will remain in the presidential team and receive a new position, which is yet to be revealed.

Former head of the economy ministry Ihor Petrashko will also remain within the power vertical, albeit in a different role.

"He will be responsible for and coordinating land reform, help Mr. Leshchenko [Roman Leshchenko, Minister of Agrarian Policy and Food]. I think he is a professional in this sphere," Zelensky said.

According to the head of state, Stepanov's dismissal is a result of his conflicts with the head of government.

"It's true, the prime minister was no longer able to work with the minister of health, with Mr. Stepanov. I didn’t intervene for quite some time. Why? Because I was afraid of destabilization if we were to change the health minister amid the covid period," Zelensky said.

New ministers

A day after the dismissal of the ministerial trio, on May 20, the Verkhovna Rada appointed their replacements.

The head of the Tax Service, Oleksiy Lyubchenko, became the new Minister of Economy, as well as the second most important person in government – the First Vice Prime Minister.

The new deputy PM promised not to raise basic taxes and to support small businesses affected by coronacrisis.

"I'm against raising the rates of budget-forming taxes. These are personal income tax, value added tax, and profit tax," Lyubchenko said, speaking from Parliament's rostrum.

The deputies also appointed the head of the Ukravtodor road management agency, Oleksandr Kubrakov, new Minister of Infrastructure. He promised to continue large-scale repairs of domestic roads, restore port infrastructure, as well as maintain the practice of signing concession deals in their regard.

The Verkhovna Rada has appointed Viktor Lyashko, Deputy Minister of Health Protection and also the chief sanitary doctor of the country, to the post of Minister of Health.

He promised to vaccinate everyone in Ukraine against COVID-19 by the end of 2021.

Competitive gas market

On May 20, a competitive natural gas market for thermal generation companies was launched in Ukraine. Without exaggeration, this is an unprecedented innovation, which previous cabinets had not dared to push forward for years.

According to Prime Minister Denys Shmyhal, this is another important step towards creating a full-fledged gas market.

"Now all thermal generation companies, most of which are owned by local authorities, will conclude contracts with gas suppliers on their own, on the best conditions available on the market," the head of government said.

With a high probability, this will lead to household tariffs for central heating and hot water significantly rising`. After all, 80% percent of the price of these services is the cost of natural gas.

The cancellation of the special obligations regime seriously worried both the leaders of Ukrainian cities and representatives of the TKE. In this connection, the Office of the President promised that in the new conditions the government will support the municipal authorities.

Latest innovations toward going digital

Over the past week, the Ministry of Digital Transformation presented new services within the framework of efforts to shift government services to a digital domain and facilitate communication with citizens.

In particular, the SVOI platform and chatbot have been launched to help citizens get in contact with local authorities, receive advice on government services, support local petitions, participate in polls, and keep themselves updated on community news.

The Ministry also allowed authorization in the Diia App through a citizen's ID-card and facial recognition.

In addition, the ministry launched an online portal for working and training on open data – the Diia. Open Data Competence Center. It is set to become the primary source of information and communication in the field of open data.

National Bank updates medium-term strategy

Last week, Governor of the National Bank, Kyrylo hevchenko, presented the regulator's strategy until 2025.

The chief of the central bank announced a variety of plans for the coming years, with the most important task being to further reduce the share of non-performing loans in the banking sector and develop digital finance.

"The new strategy of the National Bank is exactly in line with the shifts that have taken place in the world and in Ukraine. This is a roadmap, which we will be guided by to intensify economic growth in Ukraine and improve the well-being of its citizens," the head of the National Bank emphasized.

By the end of the outgoing week, in the interbank market, the national currency, the hryvnia, strengthened by 11 kopiykas to the U.S. dollar against week-start, to UAH 27.59 .

The last week of spring promises to be full of important economic events. The State Statistics Service plans to release data on industrial output and average wages for April. Also, in the near future, the vacant positions of chief taxman and CEO of state-run road management agency Ukravtodor could be filled.

Bohdan Slutsky

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