The Cabinet has proposed the IMF compromise on the price of gas

Кабмин предложил МВФ компромисс по цене на газ

Prime Minister Vladimir Groisman

Groysman, in exchange for the next tranche, offers the monetization of subsidies and the liberalization of the gas market.

Ukraine has prepared a new option of reaching a compromise with the International monetary Fund in talks on gas prices. A proposal, which envisages a package of measures proposed by the Prime Minister Volodymyr Groysman. On Wednesday, June 4, Interfax-Ukraine, citing a source close to Ukrainian government.

“The government is now waiting for the reaction of the IMF to this option. According to experts, if you manage to reach a compromise, it will be a victory due to the rigid fundamental negotiating position of the Prime Minister and flexibility in seeking options for its implementation”, – said the Agency interlocutor.

He recalled that from July 2017 Ukraine is in a difficult negotiation process with the IMF on the gas issue: Fund insists on raising gas prices for the population, which, according to various estimates, can range from 30 to 60% in connection with growth of prices on international markets, while Prime believes that the sharp rise in unjustified.

The source noted that during this time, the Ukrainian side proposed that the IMF has at least eight variants of the change of the price formula for gas based on compliance with at the time agreed with the Foundation principles of: promotion of the free market of gas and prevent the recovery of corrupt practices on the difference in gas prices, which flourished until 2016.

“But in those options being proposed by the government, taking into account the fact that the level of rising prices, which insists the IMF, not lifting for ordinary citizens,” – said the Agency interlocutor.

According to him, the government has agreed to discuss a slight quarterly increase in gas prices, which do not much affect the payment of the citizens and for the poorest it would be noticeable through the mechanism of subsidies.

It was also proposed to balance the price of gas for households and industry, but the people to establish the so-called preferential price on a certain social level of gas consumption or to defer the price increase, said the source.

He added that among good variants there was also a proposal to take away the price of gas transportation and pricing of Ukrainian gas to focus on Hub0 and Hub to apply only to imported gas.

“However, the IMF does not agree to any of these options and continues to push the Ukraine an ultimatum: either raising gas prices or refusing to provide the next tranche, which is necessary in the first place, to ensure the timely repayment of external debt. But at the same time, the failure to service foreign debt threatens to undermine Ukraine’s international reputation and considerable economic crisis”, – noted the Agency interlocutor.

Earlier, the IMF warned about a possible breakdown of the tranche. The Fund was dissatisfied with the decision of the Ukrainian government regarding the powers of the Ministry of Finance.

Also, the IMF demanded to change the rule on appeals in the law on the anti-corruption court.

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