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Azarov says gas tariffs in Ukraine not to increase any time soon

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June 18, 2011, 1:19 p.m. | Ukraine — by Interfax-Ukraine
Ukrainian Prime Minister Mykola Azarov has said that gas tariffs won't be raised any time soon. Azarov announced this on Friday evening at a meeting with Vice President of the World Bank Philippe Le Houerou and World Bank Regional Director for Moldova, Belarus and Ukraine Martin Raiser, the press service of the Ukrainian government reported on Saturday.

According to the prime minister, Ukraine won't evade the international increase in oil and food prices, and these are likely to affect the country's economy.

At the same time, he stressed that the government had managed to keep inflation within the limits adequate to the current economic situation. Despite the global price increases, any increase in gas tariffs in Ukraine is not in question so far.

As reported, the IMF decided to renew its loan partnership with Ukraine in the summer of 2010 through a new stand-by arrangement (SBA). The approved stand-by program for Ukraine is 10 billion in special drawing rights (SDR, around $15.6 billion), which is the IMF's third biggest assistance program following those for Greece and Romania. In late July 2010, Kyiv received the first tranche of SDR 1.25 billion. The IMF decided in December 2010 to allocate a second tranche worth SDR 1 billion. The program foresees future quarterly allocations of eight more tranches each worth SDR 1 billion, with the exception of the last tranche, which will be worth SDR 750 million.

However, an IMF mission that worked in Kyiv in March 2011 could not recommend to the IMF Executive Board that it approve another tranche for Ukraine. The IMF expects Ukraine to approve pension reform and settle the problem of low prices of natural gas for households - measures required for it to get the third tranche under the SBA.

On June 14, Ukraine's parliament supported government amendments to the state budget reducing its deficit by Hr. 3.5 billion to compensate for the same deficit of Naftogaz Ukrainy linked to its refusal to follow the schedule for a rise in gas tariffs for households that was earlier agreed with the IMF.

On June 16, the parliament approved a government bill on pension reform at first reading.
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