Kyiv, May 5 (Interfax-Ukraine) – Prices of goods and food would slightly grow due to the increase in pensions as a part of social initiatives declared by Ukrainian President Viktor Yanukovych, although as a whole this would not lead to the considerable worsening of the economic situation, Vice Premier and Social Policy Minister Sergiy Tigipko has said.
“We’re attentively monitoring the prices and believe us no one wants to be engaged in a political suicide. If the government initiates the increase in social payments and the provision of aid to people with one hand and use another hand to take it away via uncontrolled prices – people would not understand this,” he said in an interview with the Fifth TV Channel on May 4, 2012.
He said that over the first three months of 2012 prices grew by 0.7%, and taking this into account the indicator should not increase 3% by the end of the year, although the cabinet forecasted a rise of 7.9%.
“Last year we first saw inflation of 4.6%. When the prices do not grow, this is a trouble for the country, a large trouble compared to the situation when the prices grow by 7-8%. This means that there is no demand, and if we increase demand thanks to the increase in pensions, all payments, of course, the prices will grow. However, we’ll make everything to have the prices absolutely regulated, so people could see at the end of the year that they will win from this,” the vice premier said.
He also said that the wage fund in Ukraine amounts to around UAH 450 billion and pensions paid through the Pension Fund total near UAH 220 billion. In addition, the sum of unofficial wage payments is evaluated at some 40% of the official wage fund.
“We have around UAH 1 trillion in cash, and we’re speaking about UAH 20 billion [in payments under social initiatives]. Yes, prices could grow – I could say that the maximum growth will be 1%, if there were no additional reaction of the National Bank of Ukraine and the Cabinet of Ministers,” Tigipko said.
He expressed confidence that the increase in social payments would not affect the national currency exchange rate.
He said that many things will depend on the situation in Europe, although certain improvement is seen now.
In addition, Mykola Azarov’s government has reduced foreign debts, and today they amount to 37% of the national budget.
“I think that we would not increase these expenses and loans,” he said.
“The average pension today is UAH 1,279, and we add UAH 100, and everyone threatens that this would frustrate the macroeconomic situation in the country, and we’ll have a collapse. Nothing of this kind will happen, everything will be stable and well,” he said.