Ukraine raises gas prices 23.5 per cent, seals new IMF deal

Ukraine’s Prime Minister Volodymyr Groysman has announced that household gas tariffs would be raised by 23.5 per cent from November 1 in an effort to unlock billions of dollars in loans from the International Monetary Fund (IMF), debt markets and western backers.

Mr Groysman said that the hugely unpopular decision was necessary ahead of 2019, when foreign debt payments are due to peak and the country faces presidential and parliamentary elections.

Just hours later, Ukraine secured a new 3.9 billion US dollars stand-by aid agreement with the IMF. The IMF had long viewed the gas price increase as a requirement of any new deal.

The new agreement will run for 14 months, and, according to an IMF statement, aims to “provide an anchor for the authorities’ economic policies during 2019,” when Ukraine’s stability will be tested by the two sets of elections.

The IMF statement continued: “The agreement reached today reflects the IMF’s commitment to continue to help Ukraine achieve stronger, sustainable, and inclusive economic growth. The new programme has been developed in close co-ordination with the World Bank and the European Union, who have parallel operations to support Ukraine. The authorities’ steadfast and effective implementation will be critical for the programme to achieve its objectives.”