Poroshenko to hike pensions, citing higher customs revenue

Ukrainian President Petro Poroshenko has requested the
prime minister and pension fund head to consider hiking minimum pensions
(currently about USD 55 per month) owing to higher income from customs revenue,
the president’s press service reported on Feb. 11.

Recall that in November, Ukraine’s parliament adopted
legislation to allow Ukrainians with vehicles with EU license plates – those
having not registered their cars in Ukraine and not paid customs duties – to
register their vehicles lawfully on privileged rates by Feb. 22.

These evaders, which numbered in the millions, alleged
the customs duties for registering foreign-bought used vehicles were excessively
high, in some cases reaching the car’s value. The law also designated all the
funds gained from this “amnesty” to be directed to the State Pension Fund.
Ukraine’s 2019 budget assumed less than UAH 1 bln in revenue from the policy,
though they are currently exceeding UAH 5 bln, Poroshenko said.

Total expenditures of Ukraine’s Pension Fund are
planned at UAH 398 bln in 2019, out of which UAH 167 bln is a planned financing
gap that will be covered by contributions from the state budget.

The minimum pension in Ukraine is currently at UAH
1,497 (USD 55), which is planned to be raised by 4.5% in July and another 3.8%
in December.

Alexander Paraschiy:
Poroshenko’s initiative is aimed at boosting his electoral support among
pensioners before the elections. The surplus revenue from the amnesty as of
today (UAH 4 bln) accounts for just 1% of the fund’s annual expenditures, which
won’t be enough to significantly boost any pensions. But what the government
can do – without any fiscal cuts – is to release the scheduled pension hikes in
March, instead of July.