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IMF Urges Kyiv To Raise Gas Prices For Consumers

IMF mission leader Nikolay Gueorguiev
IMF mission leader Nikolay Gueorguiev
The International Monetary Fund (IMF) has urged Ukraine to raise consumer gas prices and let the country's currency -- the hryvnia -- trade more freely.

IMF mission leader Nikolay Gueorguiev made the recommendations at the end of a 12-day visit to Ukraine on October 31.

He said Ukraine needed a set of comprehensive and credible reforms" to stabilize the economy and revive growth.

In a statement, Gueorguiev again called on Ukraine to end the practice in which the state-run oil and gas company Naftogaz sells gas to households and other domestic consumers at prices way below the level at which it buys from Russia.

With regard to the hryvnia, which the central bank keeps pegged at about eight to the dollar as a sign of stability, Gueorguiev urged "increased flexibility" to boost exports.

In related news, Russian Prime Minister Dmitry Medvedev says he sees no reason for Moscow to cut gas supplies to Ukraine over an unpaid bill, at least for now.

In an interview with the Reuters news agency, Medvedev denied Moscow's demand for payment of an overdue $882 million bill for August gas deliveries is connected to Russian opposition to Kyiv's intention to sign agreements with the EU at an Eastern Partnership summit in Vilnius this month.

"It's the law," he said. "You have to pay for delivered goods."

But he acknowledged that what he called the "special relationship" Moscow and Kyiv now share will change if Ukraine moves closer to the EU.

"Let's hope they don't kick themselves," he said, when Ukraine realizes the "advantages" they have lost.

Based on reporting by Reuters and AFP