The National Bank of Ukraine (NBU) has said that the large increase of salaries and social payments by the government is one of the largest risks of failure to meet the inflation target in 2018, according to the proposals of the NBU board to the monetary policy guidelines for 2018.

"The expansion of the Ukrainian government's focus on financing of current social expenses could result not only in the acceleration of inflation, but also restriction of public investment and growth of debt burden. It could affect the medium-term prospects for economic growth," the NBU said last week.

According to the document, the vaguest factor is the situation in eastern Ukraine.

"If the situation were favorable for Ukraine, the reduction of risk would increase investment attractiveness, inflow of capital, acceleration of economic growth and revaluation pressure on the hryvnia," the NBU said.

The central bank said that among other key risks for inflation and economic growth in 2018 is slow introduction of reforms.

"The key political risk for macroeconomic stability is slow introduction of reforms outlined in Ukraine's program with the IMF and a delay or termination in official financing," the NBU said.

According to the document, the indefiniteness for inflation development is also linked to administratively regulated tariffs, in particular, energy tariffs, which could cause deviation of the inflation trajectory upwards or downwards in the short-term outlook.