Money and concessions - Ukrainian authorities tried to agree with IMF mission

Author : Yaroslav Konoshchuk

Source : 112 Ukraine

"I will not allow any increase in gas tariffs for the needs of the population, and those who declare a possible rise in prices by 40% should either work responsibly or write a statement of dismissal," Prime Minister Groysman assured in the winter of 2017. After a year and a half, after lengthy negotiations between the authorities and the IMF, the parties came close to agreeing on the size of the increase in prices for blue fuel. As a result, Ukraine can receive a tranche from the Fund. However, the IMF has an unwritten rule not to credit the country during the election campaign
23:37, 17 September 2018

Open source

Golden blue fuel

As previously wrote, the Ukrainian side hoped to raise the price of blue fuel for the population by 25%, although it was also preparing for an increasing of 40+. Representatives of the main creditor of our country insisted on raising the cost to the level of imported parity (currently about 60%, - Ed.).

However, during the negotiations with the IMF mission in the capital last week, according to media reports, the Ukrainian side managed to convince the Fund that the budget today will not stand the sharp jump in gas prices for the population, among other things, due to the increase in subsidies. According to sources familiar with the negotiations, this does not mean that the sides refused to lead the price to the level of import parity - the decision was simply postponed.

According to our interlocutors, the parties continue negotiations on the final formula for gas prices for the population. According to the media, the price may rise this year by almost a quarter, that is, just as much as the Ukrainian negotiators counted. The increase itself can happen already in the fall, during the election campaign. This will entail an increase in prices for hot water and heating, and may also affect the costs associated with subsidies. This is despite the fact that there are problems with the implementation of the budget for the current year.

New billions from the IMF?

In addition to gas tariffs, the sides also discussed the continuation of cooperation between Ukraine and the Fund, as in 2019 the four-year extended financing program EFF is coming to an end. Sources of in the Cabinet believe that Ukraine, taking into account peak payments for external debts in 2019-2020 needs to allocate up to 6 billion dollars. According to the interlocutors, these funds our government expects to receive from the IMF in the framework of a new program of cooperation.

The same fund, according to sources of, familiar with the negotiations, recalled a number of old obligations of the authorities in accordance with the Memorandum of Cooperation. In particular, we are talking about the legalization of the agricultural land market. Recall that in accordance with the Memorandum, the moratorium on the sale of agricultural land should be abolished. However, in view of the ambiguous evaluation of this idea both in the Ukrainian politician and in society, the legalization of the turnover of agricultural land was postponed.

It should be noted that September 6, on the day of the visit of the IMF mission, a group of people's deputies, including the representative of the Petro Poroshenko’s Bloc, appealed to the Constitutional Court to recognize the moratorium on the sale of agricultural land unconstitutional.

Another obligation of the authorities to the IMF - the large-scale privatization. Recall that in accordance with the Memorandum, the official Kyiv undertook to privatize the Odesa port plant, as well as strategic enterprises such as Turboatom, Centrenergo and the alcohol monopoly Ukrspyrt. According to sources in the Cabinet of Ministers, the Fund insists that privatization should take place under the supervision of foreign advisers. However, according to our interlocutors, not all influential domestic political players agree to share.

In the context of privatization, the sources stressed that the IMF representatives once again noted the need for a balanced budget and bringing its deficit in line with the requirements of the Fund, that is, sequestration (cost reduction). It is worth recalling that in the first quarter of 2018, according to the chairman of the Accounting Chamber Valery Patskan, the failure of the country's main state budget for the general fund exceeded 60 billion hryvnia.

However, while negotiations on a new program of cooperation between the authorities and the IMF are far from over. And the Fund itself has an unwritten rule of not crediting the country during the election campaign, which in May confirmed to the journalists the current chairman of the National Bank of Ukraine, Yakiv Smoliy.

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