Finance Minister Dismissal on Agenda

UKRAINE - In Brief 02 Jun 2018 by Dmytro Boyarchuk

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Last week media reported about open conflict between Prime-Minister Volodymyr Groysman and Finance Minister Oleksander Danylyuk. On May 23, at the Cabinet meeting Finance Minister strongly insisted on approval of his candidate for the position of his deputy. Instead Groysman removed State Fiscal Service from Minfin umbrella and canceled Minfin control over financial documents of the Cabinet. Tension between Oleksander Danylyuk and effectively all groups of interest is nothing new for us. Danylyuk destroyed many rent-seeking schemes like VAT refund and he survived till now only because he successfully placed $3 billion of Eurobonds last year and because he is a good face for the IMF negotiations. Approaching elections and problems with the IMF funding changed the situation. Politicians need funding for their campaigns while Danylyuk impedes new rent-seeking schemes. It was difficult to remove Danylyuk politically when there were chances for next IMF wire. But now, when chances for new tranche are slim, local elites probably do not understand why they should tolerate ‘hard budget constraints’ further on. So conflict erupted and it became public. In this story Danylyuk looks as a good guy resisting to a reverse in reforms. Media reported that western donors already warned the Cabinet about consequences on cutting functions of Minfin. However, we can hardly expect Poroshenko and Groysman tolerating defiance of Finance Minister. Rumors say they already are collecting votes at the parliament. Still dismissal of Danylyuk is not secured. Removing current Minister is only part of the story. What is much more important for Poroshenko and Groysman is to reach an agreement on a ne...