Ukraine intends to gradually raise gas prices for households and heat supply companies until domestic gas prices match import ones, the Ukrainian authorities said in a memorandum of economic and financial policies sent to the International Monetary Fund on July 16 in connection with a new stand-by arrangement agreed with the International Monetary Fund (IMF).
"Further increases will be necessary to unify prices for all users of gas at import parity and provide [the national gas company] Naftogaz Ukrainy with the resources it needs to improve infrastructure and meet its obligations, without relying on budgetary resources," according to the memorandum, which has been posted on the IMF’s Web site.
"An additional price increase of 50 percent for households and utilities will be effected in April 2011. Semiannual increases of gas prices paid by households and utility companies will continue until domestic price levels reach import parity. Thereafter, all gas prices will be adjusted as needed to reflect market prices," the document reads.
Ukraine also plans to reform the pension system with the objective of putting it on a sound financial footing, including through a gradual increase in the pension age for women from 55 to 60 years, by adding six months every year starting in 2010 with the aim of equalizing the pension age for all workers.
This is stipulated in a memorandum signed by Ukrainian authorities and the IMF as a part of the resumption of credit cooperation in the middle of July 2010.
According to the document, a draft law that foresees the said pension age increase is to be submitted by late September 2010 so that it can come into force by the end of 2010.
According to the memo, the reform would foresee an increase of 10 years in the qualification period for receiving full pension benefits and as increase in the minimum required insurance period from five to 15 years. This measure will motivate workers to stay in the work force, improving the balance of the Pension Fund by UAH 2 billion in 2011.
The reform is a structural benchmark of the program on cooperation with the IMF.
In addition, the Ukrainian authorities "will enact by end-December 2010 changes to the basis for calculating the additional 1% pension benefits accrued for each year of service above 20/25 for women/men," says the memo.
This measure is expected to reduce pension fund expenditure by UAH 6.2 billion in 2011.
