Azarov says there will be no ban on export

Prime Minister Mykola Azarov has confirmed Ukraine does not intend to limit grain exports in any way, contrary to recent statements by Agriculture Minister Mykola Prysiazhniuk. “Have I ever said anywhere that we would introduce a ban on the export of grain?” he said on Nov.13.

“Grain export comes in handy at the moment.” Ukraine exported three million tons of grain in September, while this year’s harvest is estimated at 46.2 million tons. This is lower than last year’s bumper crop of 56.7 million tons, but still far above internal consumption of around 29 million tons per year, according to agriculture ministry data. Grain export has been a good source of hard currency for Ukraine lately because its other major export commodities, such as steel, have been hit by both low global demand and falling prices. With lending from the International Monetary Fund still frozen, and pressure on the national currency growing, dollars are in even greater demand.

The IMF approved a $15.1 billion loan for Ukraine in August 2010, only to freeze it in March 2011 because of lack of progress on some of the long-standing issues, like increasing gas and heating prices for households and reducing the deficit of gas monopolist Naftogaz Ukraine.

The National Bank lost 8.4 percent of its hard currency reserves last month, mainly on protecting the hryvnia from devaluation.

The need for IMF cash becomes even clearer when taking into consideration the public sector’s looming $9 billion debt repayments next year, of which $5.5 billion is due to the IMF, and a growing budget deficit which stands at 7.7 percent of gross domestic product.

Azarov, however, indicated that Ukraine is not ready to raise gas prices for the population. “We think this measure is unacceptable from the point of view of the growth of internal market,” he said, adding that his government considers stimulation of internal consumption as one of its priorities in the middle of an unfavorable global economic environment.




Azarov also said he still hopes to reduce the gap in Naftogaz’s budget by negotiating a discount with Russia, which his government has been trying to do since early 2010. He said Russia’s Gazprom is currently forced to renegotiate many of its prices in Europe, and Ukraine will eventually follow this trend. He said he hopes this measure “will reduce the (Naftogaz) deficit to an acceptable level.”

As a part of its pressure campaign on Russia’s Gazprom, Ukraine started buying gas in Germany recently, receiving the first 3.3 million cubic meters by early November. Ukraine buys Gazprom’s gas at a historic high $430 per 1,000 cubic meters, while Germany’s gas comes in for about $410-415.

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