14:50 07.12.2013

IMF not insisting on single-stage increase in tariffs, says resident representative in Ukraine

The International Monetary Fund (IMF) is not insisting on a single-stage increase in tariffs in Ukraine by 40%, but recommends that they be gradually raised to an economically justified level, within several years, IMF Resident Representative in Ukraine Jerome Vacher has said.

The IMF also proposes compensating to the poorest segments of the population for the losses from such an increase by strengthening targeted social assistance, he said in an interview with the Mirror Weekly online newspaper (ZN.UA).

Vacher reiterated the fund's position that "the current extremely low gas and heat supply tariffs for households can no longer be maintained."

"Of course, we do not believe that the level of tariffs fully covering the prime cost can be achieved in one day, taking into account the path that has yet to be walked. We recommend that the tariffs be increased to an economically justified level gradually and resolutely in several stages over the next few years, covering the cost of gas purchases," he said.

He also pointed to a very important aspect of the IMF's recommendations, which is often forgotten – simultaneously with a gradual increase in tariffs the IMF proposes compensating for its consequences, i.e. strengthening targeted social assistance to those most in need of such subsidies.

"It is very important to note that simultaneously we recommend that targeted social assistance to the poorest 40% of households be strengthened by expanding the existing programs, based on an assessment of the income level," Vacher said.

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