IMF still expects Ukraine to hike gas tariffs
KYIV. Sept 12 (Interfax) - The International Monetary Fund (IMF) still insists that Ukraine increase its gas tariffs if it is to continue to receive financial assistance from the Fund.
As to the question of gas price, that condition was built into the program, and remains quite important, IMF representative in Ukraine Max Alier said during a roundtable discussion in Kyiv on Monday. Increasing the tariffs is necessary to reduce state budget expenditures for supporting national oil and gas company Naftogaz Ukrainey, Alier said.
The IMF agrees with the need to protect the most vulnerable members of society as prices for energy resources rise, but is against subsidizing
He said that the IMF had agreed on the need to protect the poor from rising energy prices, but is against subsidizing people who can pay for gas at higher prices. In this regard, he recalled that the Ukrainian government had pledged to raise gas prices by 50% in April 2011, but subsequently these requirements had been relaxed.
Alier also said that the situation in relations to Ukraine was not limited solely to the issue of an increase in gas tariffs. He noted that IMF experts were continuing to hold discussions with the government on the parameters of the state budget for 2012. He said that the state budget deficit in 2012 was expected at 2.5% of GDP, whereas this year it was 3.5%.
In late July 2010, Kyiv received the first tranche of 1.25 billion SDR. The IMF decided in December to allocate a second tranche worth 1 billion SDR. The program foresaw the future quarterly allocation of tranches, each worth 1 billion SDR, with the exception of the last tranche, which will be 750 million SDR.
However, an IMF mission that worked in Kyiv in March 2011 could not recommend to the IMF Executive Board that it approve another tranche for Ukraine. The IMF expected Ukraine to approve pension reform and settle the problem of low prices of natural gas for households - measures required for it to get the third tranche under the SBA.
Ukrainian Deputy Prime Minister and Social Policy Minister Serhiy Tigipko said that due to the delay in financing, two tranches of the stand-by loan could be combined, which would help replenish the foreign exchange reserves of the National Bank of Ukraine to the tune of about $3 billion.
