Ukraine's currency has plumbed new depths as the Franco/German brokered ceasefire in the east of the country has failed to curtail the violence.
In Kyiv the central bank says the official rate for the hryvnia has dropped some seven percent to close to 30 against the US dollar.
Ukraine has suffered monumental upheaval in recent times from revolution to conflict and is now facing huge civil service jobs cuts as the country's economic minister Aivaras Abromavicius warns:
"When it comes to people working in the government, in various public administration offices, there is a big problem. There is a big problem with pay. With the current exchange rate, salaries are below $200 per month, and this, obviously, creates room for corruption. The government wants to pass an administrative reform, so that we will be able to cut down considerably on staff numbers and yet increase salaries for the rest. In my ministry we plan to cut 50% of staff this year."
A major reform of the energy sector is planned in order to encourage competition and as part of a IMF loan deal gas prices must rise. Aivaras Abromavicius continues: "One of the key reforms is going to be the energy sector reform. Unbundling Naftogaz, splitting it into at least three companies and inviting, possibly, foreign investment into the country and obviously, we will have to rise the gas tariffs in the country, which are very low. The government position is that the rich should not benefit from the low prices, which is the current state of affairs. The position of the government is that we will rise gas tariffs as much as possible, close to the market level, and we will compensate the poor with subsidies. With the current economic decline the number of poor in the country will increase and the amount of people that will get subsidies will increase tremendously. It will be a quite serious challenge for the Ministry of Social Affairs."
It is certainly hard times ahead for Ukraine and despite IMF, US and EU assistance the country is on the brink of economic meltdown.
George Soros the business magnate and philanthropist has called on European leaders to increase efforts to bolster the Ukrainian economy.
While others claim the slow response to the crisis has given Russia the opportunity destabilise the situation in the east of the county.
Moscow denies involvement in the east of Ukraine.
Source: Euro News
