Mikheil Saakashvili, the former president of Georgia and incoming deputy prime minister of Ukraine, has urged the IMF to “at least double” loans to shore up the Ukrainian economy and public finances hit by the coronavirus shutdown.
In an interview with the Financial Times on Friday, Mr Saakashvili said an $8bn loan programme being offered by the IMF with $4bn disbursed this year “is not enough”.
“They are talking about $4bn this year . . . the most acute stage of the crisis,” Mr Saakashvili said.
The former Georgian leader, who is set to take charge of Ukraine’s reform drive, said “at least double” that amount would be needed this year as his adoptive country faced an economic storm while continuing to battle Russian-backed separatists in the country’s east.
Re-engagement with the IMF, which has propped up Ukraine since Russia’s annexation of Crimea in 2014 plunged the economy into a deep decline, would also unlock billions of dollars of additional funding from the EU, World Bank and other international financial institutions.
Ukraine’s central bank cut benchmark lending rates from 10 to 8 per cent on Thursday. It said gross domestic product, which has grown by about 3 per cent for the last four years, would contract by 5 per cent his year.
Mr Saakashvili spoke days after President Volodymyr Zelensky offered him the job of first deputy prime minister in charge of reforms. The appointment is expected to be voted on by parliament in coming days.
“The president wants me to be in charge of talks with the IMF . . . I have experience,” said the 52-year-old, who won praise for reforms that, at one stage, lifted Georgia to the top of the World Bank’s ease of doing business ranking.
Asked if he would use his acquaintance with US president Donald Trump to weigh in on the fund, Mr Saakashvili said “we should go to the political leadership, the political side as well”.
“It’s an issue of survival,” he added.
Pointing to reports of global food shortages during the pandemic, he highlighted Ukraine’s strategic importance as a top global supplier of grain and value-added food products.
“There will be an acute shortage of food . . . Ukraine needs to produce much more,” he said.
Reforms including public-private partnerships, “especially from China”, could “lure in” investment needed to boost harvests and food exports.
Mikheil Saakashvili in Kyiv in December 2017 © Sergei Chuzavkov/AFP/Getty
Mr Saakashvili’s appointment marks a spectacular comeback for the former Georgian leader who was given Ukrainian citizenship in 2015 after fleeing his own country when rivals took power and launched criminal cases against him. Petro Poroshenko, Ukraine’s then president, installed Mr Saakashvili as a regional governor but later deported him amid a bitter feud.
Ukraine’s business community was initially concerned by the possible return of Mr Saakashvili, who has a record of falling out with political allies. But the mood has improved over days on hopes he could speed up reforms allowing for a post-crisis economic take-off.
“The business community was initially somewhat stunned with the news that Mr Saakashvili is making a comeback. However, after analysing the possible scenarios there is now hope that he may indeed be the driver to push through the much-needed reforms,” said Andy Hunder, president of the American Chamber of Commerce in Ukraine.
“He will, without doubt, shake things up, hopefully with a positive outcome and boost economic growth,” he added.
Mr Saakashvili said he would focus on reforms and avoid political stand-offs, including with Arsen Avakov, the interior minister and a holdover from Mr Poroshenko’s administration with whom he clashed in the past.
Mr Saakashvili’s return to the political frontline comes weeks after Mr Zelensky reshuffled his government, appointing little-known regional official Denys Shmyhal as prime minister.
Denys Shmyhal, Ukraine’s prime minister, speaks during an extraordinary parliamentary session in Kyiv on April 13 © AP
“Shmyhal is a very decent and committed man . . . he needs to strengthen his flanks,” Mr Saakashvili said adding that one of his roles would be in boosting support in parliament for government reforms.
Top priorities including deregulation and cheaper lending would make small and medium-sized businesses a larger part of an economy still heavily dominated by a handful of oligarchs, Mr Saakashvili said.
Apart from voting on Mr Saakashvili’s nomination, Ukraine’s parliament will also in coming days vote on a bank law, which the IMF is demanding as part of its rescue. The law goes against the interests of Igor Kolomoisky, an oligarch who backed Mr Zelensky’s presidential campaign.
“Zelensky was brought in with a mandate to change everything,” Mr Saakashvili said, referring to the former comedian’s landslide election victory last spring.
“Right now, he either drains the swamp or the swamp will drain him,” Mr Saakashvili said.
“The fact that he nominated me shows that he is looking for bold and risky solutions,” he added.
