Ukraine is close to the signing of the memorandum with the IMF for the provision of the loan for the new period. According to the statement of Ukrainian President Viktor Yanukovych all technical requirements, laid down by the IMF, have been fulfilled – except for the issue of the increase in the gas tariffs for the population. This is quite a problematic issue; that is why the Ukrainian government wants to find the compromise with the IMF to resolve it.
The IMF requirement to raise the gas tariffs for the population is not at all dictated by the IMF desire to create social tensions in Ukraine. It is rather a desire to decrease the subsidies paid from the state budget to provide cheap gas for the population. At the moment, due to low gas prices in Ukraine, the government has to annually subsidize 15-20 billion hryvnias at the expense of the state budget, which are spent to compensate for the price difference. Nowadays, the gas prices for the population are at the level of approximately 1, 300 hryvnias (about 160 USD) per thousand cubic meters of gas and for the industry they are at the level of 4, 700 hryvnias per thousand cubic meters. It is a huge difference, mostly due to the fact that Russia sells gas to Ukraine at premeditatedly inflated prices – more than 430 dollars per thousand cubic meters. As a result, the gas price in Ukraine is high.
The Ukrainian government understands why the IMF requires raising the gas prices for the population. This price rise should gap the bridge between the gas prices for the industry and the population and, consequently, to significantly decrease the subsidies from the state budget; and this, in its turn, will lead to the decrease in the deficit of the state budget. This is one of the IMF objectives in terms of the Ukrainian economy. However, the increase in the gas prices in Ukraine, the country where the level of the salary is a few times lower than that in the EU countries may not significantly decrease the pressure on the state budget. The high gas prices for the population will make the Ukrainian government increase the aid for the socially vulnerable segment of society. And in the conditions of Ukraine the number of Ukrainians, simply unable to pay the new gas prices, may increase. As a result, the amount of the state funding of the social aid for Ukrainians with the new gas prices may significantly increase. Eventually, the economy from the gas price subsidies will be nullified due to the increase in social payments from the state budget.
The Ukrainian government offered the IMF a compromise settlement on gas and in general on the deficit of the state budget. Recently, in eastern and western regions of Ukraine a number of large American companies have begun active work to organize the production of shale gas. The successful drilling of shale gas has taken place in Kharkiv region. The shale gas price is expected not to exceed 200 dollars per thousand cubic meters. And this will dramatically allow for the lower gas purchases from Russia; and in perspective, perhaps, it will allow abandoning them altogether. At the same time the cost of gas in Ukraine will be lower and there will not be a need to subsidize the population at the expense of the state budget. Consequently, the problem with the deficit of the state budget of Ukraine will be solved with the help of shale gas.
Ukraine needs the IMF loan, first of all, to increase the gold and exchange reserves, stabilize the situation with the balance of payments and to provide for the sustainable and rhythmic development of the Ukrainian economy for the future. It is expected that in case of the renewal of the IMF loans to Ukraine, it will trigger the growth of Ukraine’s investment attractiveness for the international investors. The cooperation between Ukraine and the IMF will be treated by the international investors as the guarantee of successful investment in Ukraine. And this will greatly boost investment into Ukraine and secure the growth of Ukraine’s economy in general – on mutually beneficial conditions both for Ukraine and for the international investors.