30 January 2013
Prime Minister of Ukraine Mykola Azarov told a meeting with businessmen on Jan. 29 that his government will soften its monetary policy this year and create new credit opportunities on the market. Among the measures the government will pursue to stimulate the economy will involve boosting state purchases from domestic enterprises, the Kommersant-Ukrayina newspaper reported. At the same time, he said the government isn’t ready to take unpopular measures that will provoke street protests.
Zenon Zawada: The government’s economic stimulus plan, currently under development, is coinciding with the goals of the IMF talks, which will begin soon after the delegation’s arrival yesterday. He concern about sparking protests is in reference to the IMF demand to raise household natural gas prices, as well as taxation measures aimed at drawing more revenue from the populace, which ignited demonstrations in 2010. As a negotiating tactic, Azarov is continuing to send mixed signals on IMF demands, the other major one being allowing the hryvnia to depreciate. We expect an agreement will eventually be reached, though possibly later rather than sooner.