IMF: Ukraine Needs Pension Reform, Market Prices And Prosperous Naftogas

KIEV, Ukraine -- Ukraine is lagging behind other countries in the region due to structural weaknesses and problems with reforms, IMF Resident Representative in Ukraine Max Alier has said.

IMF Resident Representative in Ukraine Max Alier.

"It's extremely important to ensure that pension and sector reforms are conducted, the tariffs reach market levels, the budget is balanced, and that Naftogaz is a prosperous company," he said at a conference in Kiev on Tuesday.

Alier said that the attempt to carry out pension reform had not succeeded because additional discussion is required in Ukraine.

He rejected the view that the IMF had set too soft conditions for Kiev, which is leading to the delay in conducting reforms.

"I don't think that we did not set rigid terms. We have to wait until they [Ukraine] fulfill these measures," Alier said.

He said that sometimes in order to make progress, it was necessary to move a step at a time.

Alier praised Ukraine's fiscal consolidation, the first stage of the rise in tariffs, the reduction in inflation, and the resumption of economic growth - albeit at a slower pace than it could be.

As reported, the IMF decided to renew its loan partnership with Ukraine in the summer of 2010 through a new stand-by program.

The approved stand-by program for Ukraine is 10 billion in special drawing rights (SDR, worth around $15.6 billion), which is the IMF's third biggest assistance program following those for Greece and Romania.

In late July 2010, Kiev received the first tranche of SDR 1.25 billion.

The IMF decided in December to allocate a second tranche worth SDR 1 billion.

The program foresees the future quarterly allocation of tranches, each worth SDR 1 billion, with the exception of the last tranche, which will be worth SDR 750 million.

Source: Interfax