Ukraine’s political crisis re-escalates

Political tensions have once again come to the fore in Ukraine, putting the country’s IMF programme at risk. Although the government survived a no confidence vote, the ruling coalition has fallen apart and it remains to be seen if a new coalition can be put together without an election.

Political infighting has caused progress on the reform front to slow, triggering a warning from the IMF. Given Ukraine’s precarious economic situation and fragile balance of payments position,were the IMF to pull the plug Ukraine would almost certainly fall back into recession. On the back of all this the hryvnia has come under renewed pressure – it is down by more than 10% against the US dollar since the start of the year.