Ukraine appoints new government in biggest wartime overhaul

By Anastasiia Malenko and Max Hunder

KYIV (Reuters) -Ukraine's parliament appointed the country's first new prime minister in five years on Thursday, part of a major cabinet overhaul aimed at revitalising wartime management as prospects for peace with Russia grow dim.

Yulia Svyrydenko, 39, has been tasked by President Volodymyr Zelenskiy with boosting domestic weapons production and reviving Ukraine's loan-dependent economy.

In a speech to parliament, Zelenskiy said he expected his new government to increase the share of domestic weapons on Ukraine's battlefield to 50% from 40% within six months.

He also singled out deregulation and expanding economic co-operation with allies as other key aims of the biggest government reshuffle since Russia's February 2022 invasion.

Svyrydenko, an experienced technocrat who had served as first deputy prime minister since 2021, pledged to move "swiftly and decisively".

"War leaves no room for delay," she wrote on X.

"Our priorities for the first six months are clear: reliable supply for the army, expansion of domestic weapons production, and boosting the technological strength of our defense forces."

Svyrydenko is also well known to the Trump administration, having negotiated a deal giving the U.S. preferential access to Ukraine's mineral wealth. It was considered crucial to bolstering relations between Kyiv and Washington.

Addressing lawmakers on Thursday, Zelenskiy said further deals with the U.S. would be forthcoming but did not offer any specific details.

Parliament also appointed former prime minister Denys Shmyhal, Ukraine's longest-serving head of government, as defence minister and Svitlana Hrynchuk as energy minister.

Former Svyrydenko deputies Oleksiy Sobolev and Taras Kachka will serve as minister of economy, environment and agriculture and deputy prime minister for European integration, respectively.

"This team is time-tested," Shmyhal wrote on Thursday. "Ahead are new tasks, challenges and a high level of responsibility."

CHALLENGES AHEAD

Svyrydenko takes over the government as Russian forces press a grinding offensive across the sprawling, more than 1,000-km (621 mile) front line and intensify air strikes on Ukrainian cities.

Ukraine is betting on a budding defence industry, fuelled in part by foreign investment, to fend off Russia's bigger and better-armed war machine.

With state revenues going to defence, Kyiv will also need to find money to finance its ballooning budget deficit as foreign aid diminishes. Officials have said they could face a shortfall of about $19 billion next year.

Svyrydenko said her government would launch a full audit of public finances to achieve "real savings", as well as accelerate large-scale privatisations and help entrepreneurs.

Some opposition lawmakers voiced scepticism about the new government's ability to remain independent of Zelenskiy's administration, which wields significant wartime powers under Ukraine's constitution.

"They will be told by the president's office what they should really do," wrote Yaroslav Zheleznyak of the Holos party.

(Reporting by Anastasiia Malenko, Max Hunder and Yuliia Dysa; writing by Dan Peleschuk; Editing by Hugh Lawson, William Maclean)