European Commission points to problem of deficit at Naftogaz Ukrainy
KYIV. May 16. (Interfax) - The European Commission notes positive GDP results for Ukraine in 2011 but points out the problem of a deficit at the country's national oil and gas company Naftogaz Ukrainy.
In 2011, the Ukrainian economy demonstrated solid GDP results, at 5.2% growth, compared to 4.2% in 2010. Therefore, the country has continued its recovery after the 2009 crisis, when economic production shrank by almost 15%, the European Commission's European Neighborhood Policy said in its financial report for Ukraine for 2011, released on Tuesday.
The EU also noted that inflation declined last year; however, Naftogaz Ukrainy is experiencing a deficit, which remains one of the greatest risks for the country's budget.
So far, there have been no tariff raises for gas and utilities services for the population, as envisaged by the International Monetary Fund (IMF). At this time, the program's execution has been suspended, the report said.
Brussels fears that delays in regulating gas prices and an expected deceleration in economic activity could jeopardize the path of fiscal consolidation, agreed in accordance with the IMF program.
The European Commission also points to a slowing in the implementation of an ambitious economic reform program for 2010-2014. Ukraine's business climate deteriorated in 2011 - enterprises were pressured by various authoritative bodies and law enforcement agencies, while corruption and the general difficulty of ensuring the rule of law are among the main obstacles to doing business in Ukraine, the report said.