Adventures in Capitalism and the West: IMF Requires Ukraine to Increase Gas Price by a Whopping 40%

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Published on: Oct 25, 2018 @ 19:18  – Ukraine, as part of an agreement with the International Monetary Fund, will have to raise the price of gas for the people by another 40 percent, writes the Internet publication “Economic Pravda” with reference to an “interlocutor familiar with the position of the IMF”.

The program of cooperation with the fund provides for bringing the price of gas to the market, the source said. “The IMF is sure that Ukraine will not be unable to fulfill such“ preferential conditions ”for raising gas prices,” the article says.

If earlier it was a question of one-time increase in tariffs, now it is proposed to do this in several stages, the newspaper notes. So, in the spring of 2019, prices should rise by 15 percent, and the next increase is planned for the autumn.

This year, the Ukrainian government has already raised gas prices – from November 1 to 23.5 percent. Now a thousand cubic meters will cost 8.5 thousand hryvnias to the residents of the country (approximately $ 305 at the official rate). At the same time, Prime Minister Vladimir Groysman said that a compromise was reached with the IMF – the fund demanded an increase of 60% immediately. The head of the Cabinet also promised that in this heating season tariffs will not increase anymore.

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IMF requirements

Raising gas prices is one of the conditions for the IMF to continue cooperation with Kiev. The mission of the fund worked in the Ukrainian capital from September 6 to September 19, and, as reported by the media, put forward four conditions for obtaining a new loan. In addition to raising gas prices, Kiev must conduct an anti-corruption reform, adopt a balanced budget and reorganize the State Fiscal Service.

Moreover, according to media reports, this is a stand-by program – because of the inability to fulfill the requirements of the existing program, Kiev is forced to negotiate a loan of five to six billion dollars for a period of 12-15 months with the fund.

The four-year IMF assistance program provides for the allocation of $ 17.5 billion to Ukraine. The first tranche of five billion dollars was received by Kiev in March 2015, the second – by 1.7 billion – in August of the same year, and the third and fourth – by a billion each – in 2016 and 2017. The Ukrainian authorities expected to receive the fifth tranche by the end of 2017, but it has not yet been allocated. Now Kiev expects to get it back this year.

 

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