Yanukovych: If Russian gas price is not revised, household rates will be raised

President Viktor Yanukovych said that if Ukraine is unsuccessful in negotiating with Russia for a lower rate on imported gas, it would raise the household gas tariff in order to unlock IMF financing, Bloomberg reported this morning, citing comments made at a meeting with Western journalists yesterday. Yanukovych is scheduled to meet his Russian counterpart Dmitry Medvedev today in Donetsk to continue energy talks. A Medvedev aide, Sergei Prikhodko, said yesterday that he did not expect any new commercial contracts to be signed today. The IMF approved a Stand-By Arrangement with Ukraine on July 29, 2010 for SDR 10 bln (about USD 15.6 bln) to support authorities’ economic adjustment and reform program. The IMF approved its last tranche under the program in December 2010, which brought total disbursements to SDR 2.25 bln (USD 3.51 bln). The next scheduled tranche was to have been disbursed in March 2011, with the entire amount being directed to the central bank. Raising household gas tariffs is one of four IMF requirements before this tranche is unlocked, the others being pension reform, increase central bank independence and fiscal targets for 2011 and 2011. Ukrainian officials have said the next mission will visit Ukraine on October 24.