Prime Minister Groysman: Ukraine will be on the verge of default without foreign loans

Ukrainian Prime Minister Volodymyr Groysman said that the increase in gas pricea is a forced measure in order to pay off debts to the IMF, reported Inter TV channel.

According to Groysman, the Ukrainian national debt increased by 50 billion dollars from 2005 to 2013.

“We carry such a serious debt on our shoulders. We cannot pay it off on our own. That is why we have to enter international markets. We have to take this step to ensure stability. I am the first person who is for reducing prices, but failure to comply with this requirement will lead the country to default. Default implies a devaluation of hryvnia and doubling of prices in the country. I will do my best to a) protect people against possible increase in prices, b) prevent any economic upheavals; ensure the reduction of inflation, stability of prices, and growth of real incomes of Ukrainian citizens,” explained the Prime Minister.

He also said that he already had negotiations with the IMF concerning a fixed gas price.

“I must solve this problem. The IMF mission has arrived. We are working and we have constructive relations. We will report the results of our negotiations within two weeks,” Groysman said.

The National Bank of Ukraine spent $ 668 million to maintain a stable exchange rate of the hryvnia, and $ 607.4 million was paid to the IMF.

The government extended obligations on special gas supplies to the population and enterprises of heat and energy for a month - at regulated prices. The increase in gas prices will sharply increase the burden on the budget for the compensation of prices. The cost of subsidies will grow by another 20 billion USD, i.e. a decent part of the tranche is actually immediately used up. Meanwhile, 60.2% of gas consumers are presently recipients of subsidies. According to calculations their share may increase to 72%, after the price jump.

  Ukraine, Groysman, IMF