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Friday, Apr 25th

Last update:08:01:20 PM GMT

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IMF and Ukraine found a compromise

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[bi3on.info] - International Monetary Fund (IMF) agreed to the necessity of a gradual price increase  of natural gas for households and heating plants.«In particular, the prices will rise by 10% in April instead of the previously planned 50% increase», - said the IMF Resident Representative in Ukraine Max Alier.

 

"At first the deal was to rise price by 50% in April, but then we agreed on a gradual increase - 10-20% in April and June" - said Alier  at the 7th annual conference of the investment company Dragon Capital in Kyiv.

Alier said that Ukraine has to improve its energy efficiency and turn Naftogaz Ukraine into economically stable company. He said the current subsidiary system is unfair and inefficient.  

The representative of IMF also emphasized a priority for Ukraine of pension system reformation, because the share of pension payments in relation to GDP and the level of budgetary subsidies to the Pension Fund of Ukraine is one of the biggest in the world. "As a result – very low pensions, because the system simply cannot exist that way for a long period of time" - he said.  

Among other measures which the IMF expects from Ukraine, Alier called an establishment of the central depository and completion of the recapitalization of three nationalized banks within two to three months.   Аt the end of July 2010 the IMF decided to resume its cooperation with Ukraine on a new stand-by program (about $15.6 billion). Kyiv has already received the first two tranches of loan. Program stand-by has an eight quarterly tranches, starting from March 2011.  

However, the IMF mission that worked in Kyiv in February, was unable to recommend immediate allocation of the third tranche, stating the need to postpone money transfer for a few weeks more in order to work on revising the program to find compensators for a smoother than previously estimated, raising of gas price.  

For the next tranche Ukraine was also to pass law on pension reform at the end of March, but President Viktor Yanukovych expressed the need to postpone it for further consideration. In addition, the National Electricity Regulatory Commission has delayed increase of tariffs for natural gas for households and businesses purposes.

 

 

Source: radiosvoboda.org

translated by Bogdan Kyj