* Arbuzov is member of president's inner circle
* Likely to take over from Azarov eventually - analyst
* PM Azarov and his new deputy face tough IMF talks
By Olzhas Auyezov
KIEV, Dec 24 Ukrainian President Viktor
Yanukovich on Monday named a member of his inner circle, central
bank head Serhiy Arbuzov, as deputy prime minister, making him
an important player in upcoming talks with the IMF.
The appointment to the number-two government position also
makes Arbuzov a likely successor to Prime Minister Mykola
The first major task of the new cabinet will be to secure a
new bailout programme from the International Monetary Fund.
An IMF mission is due to visit Ukraine late in January for
what are expected to be tough talks on nailing down a new
Ukraine needs to repay or refinance more than $9 billion
debt falling due to foreign creditors in 2013, including $6.4
billion owed to the IMF which Ukraine hopes to refinance.
More often than not, the government and the central bank
have worked together smoothly, avoiding public criticism of each
other's policies. But Arbuzov is seen widely as closer to
Yanukovich than his new boss Azarov.
"Financial and economic policy is now in the hands of the
'family'," said political analyst Volodymyr Fesenko, referring
to Yanukovich's relatives and close associates.
Replacing Azarov with Arbuzov "looks almost inevitable next
year. It is just a matter of time", he added.
Although Arbuzov comes across as media-shy and avoided open
arguments with the government, official statements and leaked
documents from the central bank indicated his opinions on
economic matters sometimes differed from those of Azarov.
In June 2011, UNIAN news agency published a leaked letter in
which Arbuzov told Azarov his government was losing credibility
after refusing to carry out reforms recommended by the IMF.
The IMF has urged Kiev to pass on to ordinary Ukrainians
more of the cost of the gas it buys at high prices from Russia,
subsidies which are a large burden on the budget. Azarov has so
far refused to take the unpopular step, although Kiev may have
to become more flexible.
The government quit on Dec. 3 after an October parliamentary
election and its members have since served in an interim
capacity, apart from Azarov who was reappointed on Dec. 13.
Arbuzov, 36, will take over as first deputy prime minister
from Valery Khoroshkovsky who quit the cabinet this month in
protest at Azarov's re-appointment.
According to a separate decree issued by Yanukovich on
Monday, Arbuzov will be in charge of economy, trade, state
finances, agriculture and social policy.
Yanukovich's office said Yuri Kolobov, Arbuzov's former
deputy at the central bank, would remain finance minister.
The president named former Energy Minister Yuri Boiko,
former regional governor Olexander Vilkul and former Foreign
Minister Kostyantyn Gryshchenko as deputy prime ministers.
It was not clear who would succeed Arbuzov at the central
bank but last week Boris Pryhodko, head of treasury at state-run
Oshchadny Bank, was named its new first deputy chairman.
Arbuzov emerged from relative obscurity to become a major
figure in Kiev in September 2010 when he was named first deputy
chairman of the central bank in a surprise reshuffle.
Less than four months later, Yanukovich named him central
bank head, a position he has held since.
Before joining the central bank, Arbuzov, who was born and
educated in Donetsk - Yanukovich's home region and power base -
spent four months working at the state-owned Ukreximbank and his
earlier career as a financier was in the private sector.
In particular, Arbuzov had worked at the Ukrainian Business
Bank, a Donetsk-based lender which according to Ukrainian media
is linked to Yanukovich's elder son Oleksandr.
Arbuzov's mother Valentina Arbuzova is the chief executive
of the All-Ukrainian Development Bank, another private bank
owned by Oleksandr Yanukovich.
Arbuzov reshuffled the central bank's senior management but
largely continued the policies of the previous administration
such as maintaining the hryvnia's peg to the dollar.
The two will need to work hard to revive Ukraine's economy,
which shrank by 1.3 percent year on year in the third quarter as
global demand for steel, the main Ukrainian export, fell.