You're reading: Azarov out for now or out for good as prime minister?

 Ukrainian Prime Minister Mykola Azarov and his government resigned on Dec. 3, immediately after approving the next year's budget, and President Viktor Yanukovych accepted the resignation, the president's press service said in a statement.

The resignation came just
days before a new round of negotiations with the International
Monetary Fund, which are due to kick off on Dec. 7 in Kyiv. Ukraine
desperately needs to renew low-interest IMF loans because its state finances are
in a dismal state, and the National Bank reserves are dwindling
because of the worsening of foreign trade balance and growing
pressure on the hryvnia.

Azarov and many members of
his Cabinet were elected to parliament during the Oct. 28 vote, and
had to file their letters of resignation to the president. They will
still act as an interim government until the new one is approved. A
vote in parliament is required to approve the prime minister, but
ministerial appointments do not need such a vote.

By law, the parliament has
five days to approve the prime minister after the president proposes
a candidate. But the newly elected Rada is only to convene on Dec. 12, and it’s not clear how long it will take for it
to elect a speaker, which is an essential precondition to taking a
vote on the new prime minister. Ukraine’s old parliament is going to
convene on Dec. 4 for the last time, and is expected to vote on the
2013 budget.

Azarov’s spokesman, Vitaliy
Lukianenko, said there may still be a chance for his reappointment. At
the Monday Cabinet meeting, the prime minister told his cabinet “to
not get into a vacation mood.” He also said that in any case, there
will be “continuity.”

As acting prime minister,
Azarov will be negotiating with the IMF a new loan program as of Dec.
7.

Ukraine drew $10.5 billion from
the IMF in 2008-2009 under an initial $12 billion standby program, and
received $3.4 billion in 2010 under the second $15 billion 2.5-year standby
facility that expires this month, Dragon Capital said in its note to
investors.

The total public sector
payments amount to more than $10 billion next year, and a big chunk
of it is due to the IMF itself. With global demand for some of
Ukraine’s main export commodities, such as steel and chemicals, down,
Ukraine’s reserves are likely to take a blow. They stood at $26
billion as of last month, the National Bank reported.

National Bank Governor
Serhiy Arbuzov is named as one of the most likely candidates for
prime minister’s job. His has recently been more visible in the Ukrainian media. He also traveled to the United States earlier
this year to take the temperature about his candidacy with Ukraine’s
counterparts across the ocean.

However, some analysts are saying that his candidacy is unlikely to find support in the next parliament, which is likely to be more fractured and unpredictable than the current one. Also, as a representative of the Family, or group of power close to President Viktor Yanukovych and his elder son, he is likely to face opposition from other factions within the ruling party and the president’s close circle, analysts said.

Many analysts say
there is still a chance for Azarov’s reappointment. “It’s getting
less likely, though. It’s illogical to dismiss him, then reappoint
him,” said Viktor Luhovyk, political analyst at Dragon Capital, an
investment bank.

Azarov has
said a number of time that his government is not likely to hike gas prices for the
population, which is essential for making any further progress with
the IMF. Apart from progress on gas tariffs, the IMF expects a realistic 2013 budget
from Ukraine, and hopes that the National Bank will drop the currency’s peg to
US dollar, which is putting pressure on the hard currency reserves.
Should that happen, the hryvnia is expected to devalue by at least
10-20 percent.

Kyiv Post editor Katya Gorchinskaya can be reached at [email protected].