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Ukraine’s National Bank Expects Inflation to Exceed 15% in 2014

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The rate of inflation in Ukraine may exceed 15 percent this year, according to Stepan Kubiv, the head of the country's National Bank.

KIEV, April 2 (RIA Novosti) - The rate of inflation in Ukraine may exceed 15 percent this year, according to Stepan Kubiv, the head of the country's National Bank.

"The National Bank inflation forecasts set a range from 12% to 16%, to be more specific, 15.7%," Kubiv said, according to the UNIAN news agency. The head of the bank also noted that the level of inflation would also depend on how fast Ukraine acquires a promised IMF loan.

According to Kubiv, the forecasts will be finalized once the bank's representatives meet with IMF and World Bank officials in Washington in 10 days.

The official data of Ukraine's State Statistical Agency indicates a 0.5% growth of consumer prices last year. The annual budget had been drawn up assuming a 4.8% annual inflation rate.

Earlier, interim Prime Minister Arseny Yatsenyuk said the IMF may finalize the rescue deal for the country by the end of April. Last week, the IMF reached a preliminary stand-by agreement with Kiev to provide $14 to $18 billion as part of a stabilization program. The total volume of financial aid to Ukraine, including the IMF package, may amount to $27 billion over the next two years. The rescue packaged is conditioned on a set of reforms including an increase in consumer gas prices.

Starting April 1, Gazprom increased gas prices for Ukraine by $100 per 1,000 cubic meters. As Crimea has officially become a new subject of the Russian Federation, Moscow also withdrew a further discount, which crisis-hit Ukraine received on the condition that Russia's Black Sea Fleet would stay in the Crimean port of Sevastopol. This means Ukraine will have to pay $485.50 per 1,000 cubic meters of gas. The Ukrainian National Commission on Energy Regulation extended the gas price ceiling for industrial consumers by 29% and by 64% for government institutions effective April 1.

Yatsenyk earlier voiced the Ukrainian government's forecast on GDP declining 3% in the current year, given 12-14% inflation. The worst case scenario sees a 10% GDP decline and an imminent threat of default for Ukraine, according to the acting prime minister. 

Tags:
inflation, National Bank of Ukraine