The government plans to increase the social spending by Hr 12.5 billion, or some $450 million, to outbalance the recent 30 percent inflation.
Before, the social spendings budget was Hr 24 billion. The addition makes it Hr 36.5 billion.
“We’ll find more if needed,”
Prime Minister Arseniy Yatsenyuk said during the Feb. 28 Cabinet meeting.
The additional funds will be spent on the subsidies for the financially challenged people. Those requiring the subsidies will have to give proof of their financial situation to the Ministry of Social Policy.
“Our
philosophy (of distributing subsidies) is based on three aspects – simplified system, no direct contact, and
trust,” mentioned Yatsenyuk.
Devaluation
of hryvnia as well as austerity measures inspired by the International
Monetary Fund changes personal financial plans of many. Finance
Minister Natalia Jaresko said Ukraine’s subsidies policy was approved by the
IMF.
On
Feb. 28, Ukraine’s IMF office released a statement on the new $17.5 billion
program saying much of it will be provided upfront.
“The IMF
staff is in close contact with the National Bank of Ukraine and stands ready to
assist in designing measures that will address excessive and temporary
imbalances in the supply and demand for foreign exchange,” it said.
“We
look forward to the authorities’ rapid prior actions to trigger consideration
by the IMF executive board of Ukraine’s economic reform program supported by the
new $17.5 billion Extended Fund Facility arrangement, currently scheduled on March
11th,” the statement reads. “The
disbursements under the program will be heavily front-loaded, including a
significant initial disbursement upon approval. We are convinced that this will
help achieve rapid macroeconomic stabilization.”
Meanwhile,
the purchasing power of Ukrainians has diminished quite sharply.
“Couple
of months ago, I bought 10 bottles of the Chilean wine for Hr 38 each, now it costs Hr 60,” Halyna Yerko from Kyiv wrote on
Facebook Feb. 26.
The price of public transport in Kyiv grew by 60-100 percent. With panic prevailing
in the people’s mood, some head to the supermarkets to buy a long-lasting stock of groceries in advance, anticipating an even higher inflation.
Activists
keep protesting near the National Bank headquarters in Kyiv as they saw
hryvnia trading at the rate of 36 against the U.S. dollar on Feb. 27. In
January, it traded at 19, while in 2013 one had to pay Hr 8 for one dollar.
Kyiv Post associate business editor Ivan Verstyuk can be reached at [email protected].
