Government Celebrates May Day By Hiking Utilities For Working People 

According to them, the completion of the public utilities reform is urgent not because the IMF wants it, but because "we should protect the state budget and lend a hand to the domestic producer", who has to deviate about Hr 3 billions of his working capital annually to pay higher bills.

Recall that late last year Verkhovna Rada adopted a law, proposed by the Social Policy and Labor Committee, banning any increase in public utilities rates before paying off back-wages. However, the Constitutional Court annulled this decision of Parliament after the President's petition. Since everyone understands that the population has not been paid its earnings in months, and, thus, cannot pay for the services even under the existing rates, the government has found a quasi-way out.

As was stated at the briefing, a draft decree on mutual offsets is being prepared in the Cabinet's depths, envisioning offsetting the debts for utilities with back-wages. This arrangement will be applied in the budgetary sphere only. However, more than 80% of debts lie with the production sphere, and it is still not clear what is to be done with them. Also, a specter is haunting the corridors of power: to offset the population's rent arrears with the state debt in saving deposits. But some are doubting whether this will be fair to those who have regularly been paying their utility bills.

The officials say that the shock caused by this innovation must be alleviated by: substantial (almost double) reduction in gas price; switch from the dollar equivalent to the national currency when pricing utilities, demonopolization of the sector, and of course, the lifesaver for the poor - subsidies. Currently, 3.5 million of residents use this service. And about one million more will after May 1. Correspondingly, the annual amount of subsidies will have to be raised from Hr 1 billion to 2. Though, this will cost the state Hr 4.2 billion.

In Poland, incidentally, housing reform caused rates to drop by 40%. But the Poles reformed their economy first. Hence, it is not worth hoping for a similar miracle in Ukraine after increasing public utility rates by 25-30%.