Verkhovna Rada Chairman Andriy Parubiy said in a statement on the Ukrainian parliament’s official website that raising the gas prices is an “unavoidable decision” which is “necessary to prevent an economic crisis in Ukraine”.
Parubiy said that the decision “is not and cannot be popular”, but that statist government leaders knowingly accept losses to their own popularity when this is necessary.
“One of our country’s great problems is that the populists of the past led Ukraine into extremely severe economic circumstances, and under these constrained conditions, the modern government leaders have to carry out strict economic reforms,” - Parubiy’s statement reads.
The Verkhovna Rada Chairman said that he had met with delegations from the World Bank and the International Monetary Fund (IMF) and urged them to take the matter of raising gas prices off the agenda.
“Raising the gas prices is an unavoidable decision, since Ukraine’s financial support from the IMF, something the country has dire need of, depends on it. This decision is necessary in order to prevent an economic crisis in Ukraine,” he remarked, adding that he believes it is the government’s duty to support the decision.
“I am convinced that the system of subsidies developed by the government provides real economic protection to every family that needs it,” he added.
On October 19 at an emergency government session, Ukrainian Prime Minister Volodymyr Groysman announced that gas prices would be increasing by 23.5% for the population, and that for gas supply companies the gas price would be 8550 hryvnia per thousand cubic meters.
At present, the population pays 6.96 hryvnia per cubic meter. Compared to the new price, this will be a 22.9% increase – 0.6 percentage points less than announced by Groysman.
Gas prices were one of the key factors stipulated by the IMF as terms for refinancing: as part of its cooperation with the IMF, Ukraine undertook to renounce the public service obligations (PSO) and transition to market prices for gas, but failed to do so in summer and autumn 2017.
The Cabinet of Ministers’ decree No. 187 from March 22, 2017, stipulated that the public service obligations for the sale of gas for household use and municipal heat supply would be in effect until April 1, 2018. However, the government later extended it until the end of May, and then the end of July, August and September, and on September 28, to October 18.
On October 19, the IMF released a statement that it had reached an agreement with Ukraine on a new 14-month stand-by economic support program (SBA) that will replace the Extended Fund Facility (EFF) which expires in March 2019.
“The new stand-by program with the requested access to SDR 2.8 billion ($3.9 billion) will serve as the basis for the government’s economic policy in 2019,” the IMF stated.