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"No Ukrainian cabinet has ever been so agreeable to accept all IMF demands without reservations,” Kilinkarov stressed. Yatsenyuk’s government agreed to raise gas, water and electricity tariffs for consumers after the Ukrainian parliament had amended the country’s tax code and cut the 2014 state budget last week.
Kilinkarov believes that salary cuts will be the next step.
Ukraine’s GDP fell by 1.5 % and 4.7% in the first and second quarters of 2014, respectively.If the negative trends continue, the figures may increase to 10%, the Communist deputy said.
The Luhansk locomotive building plant, which has recently stopped production leaving 3,500 workers out of job, is just one of the signs indicating Ukraine’s economy is deteriorating, Kilinkarov went on to say.
According to the deputy, the operation in Eastern Ukraine has long ceased to be aimed against terrorists and has grown into a full-scale military operation. But the government is not imposing martial law in the eastern regions for fear of losing IMF trust.
“Any complications in receiving the IMF tranche will affect Ukraine’s status as a transit country and will increase capital outflow from Ukraine,” Kilinkarov explained.
The IMF executive board has approved the issuance of a $17 billion tranche to Ukraine two years. Ukraine received the first tranche worth 3.2 billion dollars early in May.
Ukraine will have to cut social spending and increase tariffs and taxes for consumers to meet the IMF demands.