Ukrainian President Viktor Yanukovich on Friday rejected calls by the International Monetary Fund to make domestic consumers pay more for gas, resisting an unpopular step before a presidential election due early in 2015. The refusal to end subsidies in which state-run energy company Naftogaz sells gas to households and other domestic consumers at prices far below the level at which it buys from Russia will hurt Ukraine's chances if it seeks new IMF funding.
"IMF demands to raise gas prices for households will not be accepted under any circumstances," the presidential press service quoted Yanukovich as saying. "We will never allow measures which cause people to suffer and which adversely affect the financial state of our population". During a visit last month, the IMF urged Ukraine to raise gas prices for domestic consumers and introduce a flexible exchange rate for its hryvnia currency, both steps that have previously been rejected by the government.
The IMF froze a previous $15 billion stand-by programme in early 2011 after Kiev refused to end subsidies and raise household gas and heating prices. Kiev has not yet requested a new programme but analysts expect its depleted finances mean it will eventually need one.
Ukraine must pay off $3.7 billion to the IMF next year.