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The prime minister noted that the government was able to agree on a significantly lower gas price hike than the IMF initially required.
The Ukrainian government considers it necessary to continue cooperation with international financial organizations to ensure the policy of paying off debts and reducing the burden on the budget, rather than increasing borrowing, Prime Minister of Ukraine Volodymyr Groysman said on the air of Ukraine TV channel.
“We are working with the global financial markets to repay the loans that the previous governments imposed on us in 2005-2013. Now we pay $5 billion annually, servicing the debt taken throughout that period,” PM Groysman stressed.
He recalled that one of the conditions for continuing cooperation with Ukraine's partners, primarily with the International Monetary Fund, was the increase in gas prices for the households.
However, the hike was significantly less than the primary requirements.
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“I had two options - to agree on a minimum increase in gas prices and continue cooperation or enter into a default. This would mean bankruptcy for the country. Citizens' savings would depreciate amid galloping inflation. I couldn't allow this happening," noted Groysman.
As UNIAN reported earlier, the Cabinet of Ministers of Ukraine will increase the gas price for the households by 23.5%, to UAH 8,550 per 1,000 cubic meters from November 1.
"We were starting negotiations [with the IMF] from the need to level out prices by 60%, to increase the current price by 60%. However, as a result of our negotiations and compromises, we found another approach. Prices from November 1 will increase only by 23.5%, not by 60%. This is what we managed to achieve as a result of these negotiations through incredible efforts," said Groysman.
The Cabinet of Ministers had decided to postpone the rise in prices of natural gas for households, which were due to be increased from April 2018. The relevant resolution provides for the extension of special public service obligations (PSO) of National Joint-Stock Company Naftogaz of Ukraine with regard to gas sales to regional gas companies and district-level central heating providers without a change of price until June 1, 2018. On May 30, the Cabinet extended the special obligations for Naftogaz to sell gas for the needs of households until August 1, 2018, on July 26 – until September 1, on August 29 – until October 1, on September 28 – until October 18.
Gas prices for households are set at UAH 6,958, or US$261, per 1,000 cubic meters. It is UAH 4,942, or $186, excluding VAT and transmission costs.
The issue of gas prices for households is the subject of talks between Ukraine and the IMF. The IMF insists that gas prices on the domestic market be adjusted (raised) to achieve parity with the price of imported gas.