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12 April, 2019

Ukrainian comedian gets serious with investors in bid for presidency

In a popular TV series, a fictional Ukrainian president gets so drunk at a dinner with the head of the International Monetary Fund that he throws her into a swimming pool

He then forces bystanders to drink water from the pool, thinking in his drunken stupor that it is champagne.

Volodymyr Zelenskiy, the 41-year-old comedian who played the president, is now frontrunner to become Ukraine's real head of state and his campaign team is trying to assure investors he would be able to keep the country's IMF programme on track.

Petro Poroshenko, who has led Ukraine for the past five years and faces Zelenskiy in an election run-off on April 21, paints his rival as a lightweight.

With no prior political experience, Zelenskiy is an unknown quantity to investors and the stakes are high. Ukraine's economy, dragged down by a separatist conflict in the east, is dependent on IMF assistance worth billions of dollars.

Zelenskiy's team has brought in two former ministers as advisers and has been meeting business leaders, diplomats and IMF officials as he tries to win investors' confidence.

One of the advisers, former economy minister Aivaras Abromavicius, told Reuters that Zelenskiy would preserve the central bank's independence and keep its governor, Yakiv Smoliy, in place if he won the run-off.

He would also lobby a reluctant parliament to lift a moratorium on the sale of farmland and change how businesses are taxed, Abromavicius said.

Asked whether Zelenskiy still had a credibility gap to overcome with investors, Abromavicius said: "It's all work in progress."

"Of course, he's new to politics. He doesn't answer all the questions the way every voter wants to hear but with every day we hear more and more concrete statements," he said.

Abromavicius, who fell out with Poroshenko in 2016, said Zelenskiy was committed to keeping cooperation with the IMF on track because the "IMF is an anchor of reforms in this country. The IMF means macroeconomic stability."

Zelenskiy has met IMF officials and the two sides agreed neither wants Ukraine to be in an IMF programme as such, Abromavicius said, but its departure depended on Ukraine being successful, implementing reforms, paying back debts and tapping into open markets rather than seeking IMF assistance.

"And that of course will take some more time," he said.

The Zelenskiy policies outlined by Abromavicius include accenting cooperation with the IMF towards fighting corruption and reform of law enforcement bodies, including stripping them of their powers to investigate economic crimes. 


Zelenskiy came top in the first round of the election on March 31, running an unorthodox campaign that relied heavily on social media and comedy shows.

Meeting smartly dressed businessmen and women from the American Chamber of Commerce (ACC) last month, Zelenskiy drew comment on social media by showing up in a grey t-shirt.

"With Poroshenko, the business community, we pretty much feel we know what's going to happen, we expect a business-as-usual approach," said ACC President Andy Hunder. "We know much less about candidate Volodymyr Zelenskiy." 

Zelenskiy and his advisers conveyed the message that investors can do business with them though he was sometimes short on detail, Hunder said.

"We've looked at Zelenskiy's programme, we've asked him specific questions when we met him," Hunder said. 

The answers were quite vague, he said, "but the message has been delivered clearly that the IMF programme will continue -- unlike what he did to the IMF in the TV show."

Investors who spoke to Reuters said they had been reassured that Abromavicius and former Finance Minister Oleksandr Danylyuk were advising Zelenskiy but they have questions about the comedian's relationship with the oligarch Ihor Kolomoisky. 

Some have asked whether a Zelenskiy presidency might help Kolomoisky win compensation for or regain ownership of PrivatBank, Ukraine's largest lender. 

The government wrested PrivatBank from Kolomoisky's control in 2016, saying billions of dollars were funnelled out while he owned it. Kolomoisky denies any wrongdoing. 

Zelenskiy denies he would return PrivatBank to Kolomoisky. The two men say their relationship is strictly professional, based on Zelenskiy airing his shows on Kolomoisky's television channel 1+1.

Damien Buchet, Chief Investment Officer of the EM Total Return Strategy, Finisterre Capital, said Zelenskiy seems to say the "right things" and seems to be surrounded by the "right people" on the economy.

"Whether they have the upper hand on shaping potential policy with him remains to be seen. We have the Kolomoisky connection, which still worries people," he said.

Ukraine has pulled itself out of a steep recession in 2014-2015 but reforms were left unfinished in Poroshenko's first term, leading to repeated delays in IMF money disbursements, and foreign direct investment remained tepid.

Before he embarked on a political career, Zelenskiy's troupe organised a social media campaign against the government's decision to raise household gas prices in October, encouraging citizens to post pictures of their bills online. 

Asked if Zelenskiy would allow gas prices to rise to market levels, an IMF demand, Abromavicius said the decision ultimately lay with the government and not the president. He said warmer weather this spring had lowered international gas prices and might lessen the need for Ukraine to raise them.

On the night of the swimming pool incident in the TV series, Zelenskiy's fictional president had gone on a charm offensive to persuade the IMF to allow him to defer reforms, including raising the pension age and utility prices.

He ended up drunkenly acceding to them.


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