NBU estimates ways pension increase could accelerate inflation

The NBU noted that, according to the government's estimates, an additional UAH 20 billion may be needed to modernize pensions in the fourth quarter of 2017.

"Taking into account the fact that the effects on the budget from the increase in pensions will be compensated by other articles (the budget deficit is less than 2.5% of GDP in 2017 and 2018), according to the estimates of the National Bank, the increase in pensions will have a neutral impact on the real growth rate of the economy, however it will entail moderate pressure on the level of consumer prices (an additional 0.3-0.6 percentage points for the annual consumer inflation in 2018)," the report says.

Read alsoPension Fund in Ukraine boasts over-fulfillment of budget targetsAs UNIAN reported earlier, the Verkhovna Rada of Ukraine on October 3 passed a bill on pension reform, which introduces requirements for the minimum pension insurance record for retirement and provides for an increase in retirement benefits to be paid to 9 million pensioners in the amount of UAH 200 to UAH 1,000 each per month starting from October.

The government and the National Bank of Ukraine (NBU) forecast a 12.2% inflation in Ukraine in 2017. At the beginning of the year the government's projected figure was 10%, while that of the National Bank stood at 9.1%.

In 2018, the NBU expects a reduction in inflation in Ukraine to the target level.