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2018-10-22 11:45:00

UKRAINE'S GAS PRICES UP 23.5%

UKRAINE'S GAS PRICES UP 23.5%

CNBCUkraine announced on Friday it would raise household gas prices by nearly a quarter as Prime Minister Volodymyr Groysman warned that the country risked default if it crashed out of its International Monetary Fund aid program.

Raising gas prices was an IMF requirement and takes the government a step closer to securing another aid tranche before the deal expires next year, when the country heads into back-to-back elections and must service a rising debt burden.

If Ukraine receives another tranche, that would allow the government to go to the market to issue new debt and would also pave the way for the European Union and other foreign donors to disburse more aid.

The government initially had agreed to raise gas prices but later backtracked, knowing the potential for voter anger during presidential and parliamentary elections.

"We have no other option to prevent extremely difficult events," Groysman said during a televised cabinet meeting.

"If we are not able to continue cooperation with our international partners," Groysman warned, then the country will not be able to service its debt.

"This may lead to the situation when Ukraine will be put into default," he said, a return to the 1990s of "hyper-inflation, price increases, wage devaluation."

Ukraine's eurobonds rose across the curve following the announcement. The IMF did not immediately offer comment after Groysman's announcement.

Giving a taste of the backlash that is likely to follow, Olena Babak, a lawmaker of the opposition Samopomich party, told the 112 news channel that it would push Ukrainians into poverty.

"This is a crime against Ukraine. There is enough Ukrainian gas for consumers and for heating supply," she said.

The IMF joined efforts to rescue Ukraine from economic crisis following Russia's annexation of Crimea in 2014 and the outbreak of a Kremlin-backed separatist insurgency.

But IMF aid has effectively been frozen since April 2017 as Ukraine's performance on reforms slowed down and due to the government's refusal to raise gas prices, kept artificially low since Soviet times, to market levels.

Ukraine wants the IMF to agree to a new standby aid agreement to maintain financial stability and the confidence of investors and foreign allies through the elections.

The IMF also wants Ukraine to keep its budget deficit in check, which will put the spotlight on discussions on the 2019 budget which parliament must vote on by the end of the year.

Groysman said household gas prices would be raised by 23.5 percent from Nov 1.

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Earlier:

 EBRD HAS UKRAINE FOR  €12.1 BLN
2018, October, 12, 11:05:00

EBRD HAS UKRAINE FOR €12.1 BLN

EBRD - The EBRD is the largest international financial investor in Ukraine. To date, the Bank has made a cumulative commitment of almost €12.1 billion across some 400 projects since the start of its operations in the country in 1993.

 

 ДЕФИЦИТ УКРАИНЫ В 2,7 РАЗА БОЛЬШЕ
2018, September, 5, 10:35:00

UKRAINE'S DEFICIT UP 2.7 TIMES

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 UKRAINE'S DEBT WILL UP
2018, August, 29, 10:20:00

UKRAINE'S DEBT WILL UP

UNIAN - "If we don't pay, this will mean inflation, uncontrolled price rises for everything, depreciation of the national currency, halt of industrial production, and so on... And that's why we are adopting a strategy to manage the debt so as to protect people from any negative consequences as much as possible. We spend UAH 130 billion annually on debt servicing alone," Groysman said.

 

 U.S. HAS UKRAINE
2018, August, 27, 14:10:00

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REUTERS - Ukraine government should consider looking for alternatives to natural gas supplies from Russia.

 

 IMF: UKRAINE'S PRICE: $17.5 BLN
2018, August, 24, 11:20:00

IMF: UKRAINE'S PRICE: $17.5 BLN

UNIAN - Ukraine must raise gas prices to market levels in order to qualify for more aid under a $17.5 billion IMF program. Ukraine, which wants to resume cooperation with the International Monetary Fund (IMF), may need to increase household gas prices, Prime Minister Volodymyr Groysman was quoted as saying on Thursday.

 

 GAZPROM IS GETTING
2018, May, 25, 10:35:00

GAZPROM IS GETTING

REUTERS - The head of Ukraine’s Naftogaz said on Thursday EU-mediated talks over future Russian gas transit via the country to Europe must include Gazprom and must be based on firm commitments.

 

 U.S. BOUGHT UKRAINE
2018, April, 20, 08:35:00

U.S. BOUGHT UKRAINE

U.S.DT - U.S. Treasury Secretary Steven Mnuchin met with Finance Minister Oleksandr Danyliuk of Ukraine. Secretary Mnuchin and Minister Danyliuk discussed the economic and reform outlook of the Ukrainian economy.

 

 

Tags: UKRAINE, GAS, IMF

Chronicle:

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