Well dear readers, having already had one attempt at an agreement with the IMF, then reneged upon bu then Prime minister Yulia Tymoshenko, Ukraine managed to convince the IMF to have another go with the new government.
As part of the deal was pension reform which is much needed.
Yet here is the current Prime Minister seemingly signaling his departure from the IMF agreement.
The Ukrainian government may cancel an IMF-backed plan to raise the retirement age for women if the public speaks up against it, Prime Minister Mykola Azarov said on Monday.
Under its $15 billion deal with the International Monetary Fund, Ukraine said it would raise the retirement age for women to 60 from 55, bringing it into line with that for men. A draft bill on pension reform is now with the parliament.
Analysts, worried by the government’s earlier decision to back down on an unpopular tax reform, say the pension reform’s implementation will be the key indicator of Ukraine’s willingness to comply with IMF programme policies.
But, in a move that could displease the Fund, Azarov said he was ready to drop parts of the plan after its review by the wider public.
“Let us listen to our people, if they say they don’t like such a system then no International Monetary Fund is going to stop me,” Azarov told a briefing. “We will say that our people don’t want (a reform), they want to live like they live now.”
Pensions are relatively small on an individual basis — about $140 a month on average — but total pension expenditure is a big burden on the ex-Soviet republic’s budget, amounting to 18 percent of gross domestic product (GDP) in 2009, one of the highest rates in Europe.
There are nine pensioners for every 10 working people paying into the pension fund in Ukraine — and this ratio is set to get worse as the population ages. (Writing by Olzhas Auyezov; Editing by Ruth Pitchford)
There is nothing wrong with the pension plan as proposed, at least as far as the gradual increase in qualifying age is concerned. Reform is not for the weak leader and international agreements are not to be broken if you are trying to transform the nations image.
This statement will come back and haunt Ukraine if this reform does not happen.