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Nation    

Prez calls for ‘radical economic reforms’
Journal Staff Report

KIEV, Nov. 17 – President Viktor Yanukovych, addressing the country’s top security body, said Wednesday the government should start “radical economic reforms” in 2011, but also make sure there are no “revolutions” in Ukraine.

Yanukovych addressed the National Security and Defense Council as Ukraine seeks to secure $1.6 billion in lending from the International Monetary Fund next month.

“The main task for 2011 is to conduct radical economic reforms under condition of maintaining social stability,” Yanukovych said.

One of the key demands from the IMF for the government is the introduction of social security reform that includes increasing retirement age, an extremely unpopular and sensitive political measure.

The government will have to consider and perhaps to approve the measures at a meeting on Nov. 30 before the IMF board of directors decides on whether to disburse the lending to Ukraine.

The government has so far been sending mixed signals concerning the suggested increase of the retirement age, but without a clear commitment to go ahead with the reform the IMF may postpone the lending, leaving the country’s budget with a huge budget deficit.

Seven out of 10 countries in Europe have been moving to increase retirement age among other austerity measures while coping with widening budget deficits caused by the global financial crisis.

“The IMF has very tough demands,” Serhiy Tyhypko, deputy prime minister in charge of talks with the IMF, told Channel 5. “The situation is so difficult that we won’t be able to deal with it through popular measures only.”

The government has earlier this year yielded to pressure from the IMF by increasing 50% natural gas prices for households starting from August 1, but the Washington-based lender had been insisting on another 50% price hike in April 2011.

Increasing the retirement age in Ukraine is the key to reducing a budget gap at the Pension Fund, the state-run social security fund. Prime Minister Mykola Azarov estimated the gap at 60 billion hryvnias in 2010.

There are 14 million retirees in Ukraine that receive monthly social security payments that compares with 18 million those that are employed.

Yanukovych said that without reforming the social security system “within several years” the number of those employed and those that had retired would be equal.

“When I hear, Mykola Yanovych, that you say that everything is great and everything will be great, I am telling you: tell the truth,” Yanukovych said addressing Azarov.

“Show the charts that you are showing me on what is happening in the world,“ Yanukovych said. “Say the truth, don’t sing songs.”

The austerity measures is launched quickly may help the government to reduce budget deficit to 3.5% of the gross domestic product in 2011 from 5.5% that is expected in 2010.

But with the reforms, the government must also work hard to make sure that social stability is kept and there are no massive street protests, Yanukovych said.

He said that “preventing political crises and revolutions” is one of five priorities set for the government in 2011, along with reforms and modernization, effective domestic and foreign policies, effective social policy and long-term strategy. (tl/ez)




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