Oleksandr Klymenko Official website
Digest | 561 | 11.03.2015

The IMF did not demand from Ukrainian Government to raise utility tariffs, – Klymenko

Applying for a loan from the International Monetary Fund (IMF) will allow Ukraine to avoid default, but will lead to a significant deterioration in living standards. Thus, according to Oleksandr Klymenko – the ex-minister of revenues and duties, the founder of the public initiative “Restoring Donbas” – this deterioration will be compensated only after the start of economic growth in 1-2 years.

On his Facebook page politician stressed that the IMF did not demand from Ukrainian Government to raise utility tariffs for the population, but was waiting for deficit reduction of National Joint Stock Company “Naftogaz” to zero by 2017.

It was possible to reduce the deficit of “Naftogaz” by a fundamental way of decreasing the costs of state-owned company (the majority had corruption component). Also they could do it through the termination of consumption patterns of cheap Ukrainian gas by commercial enterprises, meanwhile this gas is intended for the population. Instead, the government chose to climb into the pockets of its citizens, “- says Klymenko.

Let us remind that according to the Government’s decision, Ukrainians are expected for a significant increase in utility payments from April 1: rising gas prices will be 285%, the price of thermal energy will rise by 67%.

In addition, the government intends to reduce budget expanses by reducing public sector by 3%, including state employees by 20%. Pensions of working pensioners will be cut, part of the benefits for early retirement will be canceled and the retirement age will gradually raise – on 6 months each year during 5 years. At the same time, the indexation of pensions is delayed until 2016.

The education field will be also affected by the reform: the number of higher education institutions will be reduced from 802 to 317, secondary schools – by 5%. In the tax area, additional import tax will be saved (at a rate of 5% and 10% depending on the group of products), as well as VAT for the agricultural sector, which will be implemented in 2016.

Government intends to strengthen banking supervision via holding the reinforced inspections of the the largest banks and the introduction of unlimited financial liability of bank owners for losses resulting from lending to related parties. Thus, foreign exchange restrictions and parallel exchange rates remain. Consequently, we should not reckon for the stability of the hryvnia.

“We do not need illusions. It is not reforms. Reducing of government expanses and the freezing of incomes of the population will not provide economic growth. It is only a postponement of the current problems “in the closet”. The effectiveness of implementation of the goals of the Memorandum with the IMF will depend on the performance of the struggling against corruption and resolving situation in Donbas. Without achieving clear results in this context, such measures will lead to further impoverishment of the population. It will not attract investors and providing economic growth, “- emphasizes Klymenko.

Link to source: RBC - Ukraine

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