Ukraine president seeks "new brains and new hearts" as he ousts PM

by Reuters
Wednesday, 4 March 2020 17:26 GMT

* Honcharuk leaves as youngest and most short-lived PM

* Reshuffle throws commitment to reforms into focus

* Government of new faces, "but faces are not enough" (Adds Zelenskiy speech, vote, details)

By Pavel Polityuk and Ilya Zhegulev

KIEV, March 4 (Reuters) - Ukraine President Volodymyr Zelenskiy ditched Prime Minister Oleksiy Honcharuk in a sweeping reshuffle on Wednesday after just six months in charge, saying "new brains and new hearts" were needed to revive the economy and tackle corruption.

At a special parliament session, lawmakers voted to accept the resignation of Honcharuk, 35, who left as the country's youngest and most short-lived prime minister since independence in 1991.

He was replaced by Denys Shymgal, who told parliament his immediate challenge was to stave off an economic and budget crisis. He wanted to revise the 2020 budget, cut the salaries of ministers and some officials, and also said the strong hryvnia currency had hurt exports.

The reshuffle threw Ukraine's commitment to reforms into focus at a time when it is trying to finalise a new loan programme with the International Monetary Fund that is seen as crucial to economic stability and investor confidence.

Zelenskiy was set to bring other more experienced operators into the cabinet, signalling a change of direction for the president, who was elected last year pitching himself as an everyman outsider who would bring new faces into politics.

Finance Minister Oksana Markarova could be axed for Ihor Umansky, who was acting finance minister a decade ago under Prime Minister Yulia Tymoshenko.

Speaking before the vote, Zelenskiy criticised the government for failing to arrest an industrial slump and for being soft on tackling graft, while seeking to reassure Ukraine's international partners of his commitment to reforms.

"Yes, indeed, this is the first government where there is no high-level corruption. But not stealing is not enough. This is a government of new faces, but faces are not enough," Zelenskiy said. "New brains and new hearts are needed."

PATCHY PROGRESS

Zelenskiy also took a swipe at foreigners being on the supervisory board of state-run firms - many of which were appointed with the backing of international donors - saying Ukrainian citizens felt like a minority on them.

An actor with no political experience who played a fictional president in a comedy series, Zelenskiy swept to power in a landslide presidential election win last year.

But his administration's popularity has sagged after patchy progress on a commitment to end the war against Russian-backed separatists in the eastern Donbass region and to fight high-level graft.

Shmygal used to work for DTEK, Ukraine's largest private energy group, owned by the country's richest man, Rinat Akhmetov.

The new government "is radically different because we took into account society's demand for professionals. We took people who are authorities in their fields," Oleksandr Kachura, a lawmaker in Zelenskiy's party, told Reuters.

"Previously, this was considered a drawback, but now it is perceived differently."

Honcharuk's position had been under scrutiny since the leak in January of a recording that suggested he had made unflattering comments about Zelenskiy.

His government also tussled with Ihor Kolomoisky, one of Ukraine's wealthiest tycoons, who has been fighting to reverse the 2016 nationalisation of his former bank PrivatBank, the country's largest lender. Zelenskiy, whose TV show became a hit on a station owned by Kolomoisky, denies that his business ties with the tycoon influence policy decisions.

In order to secure new IMF loans, Honcharuk's government had tried to pass a law on banking insolvency through parliament that would bar PrivatBank from returning to Kolomoisky.

"It seems to me yes, this is a victory for Kolomoisky and his people," a source in Zelenskiy's party said about the reshuffle. (Reporting by Pavel Polityuk, Ilya Zhegulev and Natalia Zinets; writing by Matthias Williams Editing by Peter Graff and Nick Macfie)

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