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No one is laughing now (continued)

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      By Emerging Markets Debt TeamEaton Vance Management

      Boston - It hasn't taken long for the reform agenda of Ukraine President Volodymyr Zelensky to bear fruit. He has assembled a new cabinet dominated by young political outsiders, and the new prime minister, Alexei Goncharuk, shares Zelensky's reform-minded zeal.

      Zelensky's Servant of the People Party, which won an absolute parliamentary majority in July, set forth ambitious goals at its first meeting on August 29. The first big accomplishment was to eliminate immunity for parliamentary deputies, and the short-term legislative "to-do" list* is no less impressive:

      • 2020 draft budget by September 15
      • Land reform draft bill by October 1 and passed by December 1
      • Draft legislation on framework for public-private partnerships (PPPs) by October 1
      • "Split bill" (International Monetary Fund benchmark) by October 1
      • Draft legislation to combat corporate raiding by October 1
      • State-owned small- and medium-enterprises (SMEs) up for sale by December 1 via electronic auction system
      • Privatization plans for large state-owned enterprises (SOEs) to be drawn up by December 1
      • Capital controls completely removed by the end of 2019
      • Draft legislation to liberalize the labor market by January 1, 2020
      • 2,000 new judges vetted and hired by January 1, 2020

      Other good news for the country has emerged recently as well. The central bank lowered its policy rate by 50 basis points to 16.5%, following its July cut, while Fitch upgraded Ukraine's sovereign debt from B- to B on Friday.

      Zelensky also scored a significant win with the prisoner swap with Russia over the weekend, in which 35 people on each side were exchanged following weeks of negotiations. This a rare agreement between the two countries and is seen "as a condition for further talk." Russia and Ukraine have been engaged in a long-running conflict over control of eastern Ukraine, following the Russia's 2014 invasion of Crimea. Ending the conflict and getting the prisoners back was a major campaign promise.

      Bottom line: Even optimists can be justifiably surprised at the comprehensive scope of parliament's plans. If Zelensky and the legislature can maintain momentum, this could be a real opportunity for reform in Ukraine.