Economic Alarm Raised Over Prospect Of Ukraine Election

KIEV, Ukraine -- A press conference held by representatives of Ukraine's business sector and alumni from leading Universities such as Harvard, Oxford and LSE, have expressed deep concern over the effect that a possible pre-term parliamentary election could have on Ukraine's economy and financial outlook.


The panel speakers shared the view that a possible new election was "a disaster waiting to happen," and called for Ukraine's political parties to reach a compromise for the sake of the nation.

The panel pointed to increasing negative sentiment from financial analysts alarmed at the prospect of a third parliamentary election in as many years.

The press conference outlined the challenges facing Ukraine's economy.

These include falling commodity prices, rising energy costs and the need to tame inflation. Meanwhile the country's current account deficit has grown while economic growth has slowed.

This year Ukraine's stock market fell by 70 percent.

Dmytro Tarabakin, Managing Director of Dragon Capital said, "Our economy is challenged by a tough macro-economic environment and worsening global market conditions. Now is the time for Ukraine's politicians to put aside their personal differences and forge a stable, reliable government that is committed to sound economic policies."

"The prospect of a parliamentary election would be a disaster waiting to happen. It would serve only to enhance political and economic uncertainty, paralyse the institutions of government and fuel negative sentiment," said Vasyl Myroshnychenko, Partner, CFC Consulting.

The stark warning and call for unity came a week after Fitch Ratings downgraded Ukraine's Long-Term IDR rating to BB-, based on an Outlook revision from Stable to Negative.

The risk of "deteriorating fundamentals" was cited and "political volatility" described as a factor.

A note from Citigroup Global Markets Limited, entitled "Wake-up Call," issued on 22 September, reported: "There is a growing consensus that the political short-sightedness and the consequent lack of policy and reform focus is no longer sustainable in the face of a treacherous global financial mix, particularly given the overheating economy, significant external financing needs, and limited monetary tools."

Following a recent visit to Ukraine, a note from the Royal Bank of Scotland, issued on 26 September, said: "Obviously early elections are the worst case scenario, as given the challenges, Ukraine needs a strong government to take difficult decisions."

The press-conference was held at the Ukrainian News Agency. The panel included Dmytro Tarabakin, MD, Dragon Capital (Roosevelt University); Oleg Ustenko, Deputy Executive Director, The Bleyzer Foundation (M.A. Harvard; PhD National Kyiv Economic University); Vasyl Myroshnychenko, Partner, CFC Consulting, Director of the Ukrainian British City Club (MSc, LSE); and Nadiya Kravets (MPhil, PhD Candidate Oxford University), President Emeritus of the Oxford Ukrainian Society.

This latest press conference, followed a press briefing yesterday by the non-affiliated public initiative "In the name of Ukraine," which expressed concern over the possible dissolution of the Verkhovna Rada (parliament) and early elections.

Leading public figures called for Ukraine's democratic leaders to put aside their differences and unite in the best interests of the country.

Top figures included: Stephan Bolotenyuk, the Chairman of the public initiative organisation and President of the Academy of Original Ideas; Nadiya Chernoukha, Head of the Lugansk Women's Organisation DIYA; Professor Stephan Pavliuk, Congress of Ukrainian Intelligentsia; Dr Olena Pavlova, Professor of Law and the President and founder of the International Standard Franchise Company; Vasyl Tymkovych, the Head of Youth, Agrarian Trade Union.

Professor Pavliuk said yesterday, "What we need is a stable, predictable yet progressive democratic government. It saddens me to see how the reform agenda started by the Tymoshenko government was stopped in its tracks."

Source: Wall Street Journal