Highlight: Political crisis
Instability is usual feature of Ukrainian politics. To some degree it is a price of the democracy: Ukraine changed five elected leaders over 25 years of the independence, which is the largest number among CIS states. However, average Ukrainian government rarely lasted over one-two years as it lost majority in the Parliament or was ousted by the President. On top of this, in last ten years Ukraine went through two ”Maidans” that led to change in country’ leadership. Ukraine may find itself with new Government in the very near future. Frequent government changes do not help the country as there is little to ensure continuity in government policies. Budget planning is done on single-year basis, senior civil servants are frequently replaced along with politically appointed Ministers. Strategic planning exercises are rarely seen to the end and even if they do often they are often ignored by new governments. As a result, each new Government that comes to power starts from scratch in many areas.
Politics: The Parliament declared the Government’s performance unsatisfactory but failed to get enough votes for no-confidence motion.
Real sector: Retail sales by enterprises in January increased by 0.1% yoy due to stabilization of consumer sentiments.
Energy sector:In March, the electricity tariffs for the population were increased as initially planned.
Agriculture:Gross agricultural production in January decreased by 2.5%.
External sector: Current account in January was negative at USD 0.4 bn as trade in goods deficit reached USD 0.6 bn.
Privatisation: The start of big privatisation is planned for the nearest future.
Fiscal policy: Consolidated fiscal expenditures in January reduced by 7.1% yoy.
Social policy: The Government has started the verification of social payments.
Labour market:Real wage declined by 13.2% yoy as a result of high inflation and weak labour market.
Monetary policy: In February, monthly core inflation remained low at 0.4% mom and CPI dropped by 0.4% mom.
Exchange rate: Interbank exchange rate moved from UAH 25 per USD in the beginning of February to over UAH 27 in the second half of the month.
State debt: Increased political instability resulted in further delay in the provision of the third tranche of the IMF loan.
