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Mirror Weekly Discusses Housing and Social Provisions Reforms

September 14 – The Weekly Mirror newspaper, U-Media Project’s partner, organized the expert discussion, “On the Way to Housing Subsidies Monetization,” in Kyiv for a joint audience of 25 participants including representatives from the International Monetary Fund’s mission to Ukraine, Ukrainian high-level officials, international organizations’ representatives, and journalists.

The two-hour discussion explored the progress and challenges in subsidizing citizens’ consumption of housing services, electricity, and gas to alleviate the rising costs of utilities as Ukraine breaks its dependence on Russian supplies. In particular, participants discussed resource consumption, transparency and cooperation of natural resources vendors and distributors, and upcoming changes to subsidy policies. Deputy Finance Minister Yuriy Dzhyhyr, department director of Naftogas Energy Savings Oleskyi Khabatiuk, and social policy expert Olha Pishchulina of Razumkov Center spoke at the event.

Participants pointed out government subsidies are the best mechanism for ensuring a smooth transition from subsidized to market gas rates for consumers; subsidies are a legacy of emerging and post-Soviet economies. Pishchulina stated that currently more than 50 percent of the Ukrainian population qualifies for social assistance from the state, which looks like a national catastrophe. No other developed democratic state has that burden on the budget, she said. That said, the system of subsidies is abused; government employees and citizens provide fraudulent information in order to inflate subsidy payments. Khabatyuk mentioned there are no mechanisms to calculate the accurate volume of gas consumed by households, as not every household has a gas meter. This presents a black hole for the misappropriation of budgeted subsidies.

Experts also observed a negative tendency toward insufficient energy savings efforts by households subsidized by the state. Participants concluded that, as a rise in gas rates is set for this fall, the provision of government financial assistance should be used to concurrently encourage Ukrainian households to adopt reasonable gas consumption practices while supporting assistance for them. Energy savings should be the top priority for each Ukrainian family, they said. Ukraine’s government is also negotiating with its IMF counterparts on the possibility of a slow and steady increase in rates, versus a 20 percent leap, which would be a burden that could influence the way people vote in the 2019 Presidential and Parliamentary elections.

Overall, this discussion served to promote upcoming improvements in subsidy monetization and further informed journalists and the international community on social provisions reform.

Photo: © Andrei Tovstyzhenko, ZN.UA