If West stops funding indexing pensions at risk - Ukrainian Minister of Economy
Yuliia Svyrydenko, First Deputy Prime Minister and Minister of Economy
The Ukrainian government may cancel the planned pension indexation starting March 1 in case of a delay in financial assistance from the West. However, there will be enough funds for the basic pension, according to the Minister of Social Policy, Oksana Zholnovych.
The minister reassured all pensioners receiving old-age pensions. According to her, the lion's share of the Pension Fund's budget is formed from internal pension revenues provided by Ukrainian taxpayers.
"It may not be possible to talk about indexation if there are such risks. But the basic pension will be paid, and we will find funds for it," she said.
At the same time, the minister reminded that social payments, including those for internally displaced persons, are funded through international aid.
"But now the Ministry of Social Policy, at the end of the year, has concluded an agreement with the World Bank for almost $2 billion, and these funds for the first months will cover our basic social expenses. So I am sure people will not be left without the necessary funds," Zholnovych reported.
The minister also noted that in case of problems with assistance, the Ministry of Social Policy will expand programs with international agencies that currently provide funding.
Problems with assistance
Earlier, Yuliia Svyrydenko, First Deputy Prime Minister and Minister of Economy told the Financial Times that Ukraine might have to postpone the payment of pensions and salaries to public servants if the EU and the US do not provide the promised financial assistance at the beginning of next year.
Later, Svyrydenko tried to clarify her statement for the foreign press on her Facebook. In particular, she said that the risk of delays is in the long-term perspective, and by the beginning of 2024, the government has a "Plan B," but did not specify what it entails.
Pension indexation
In September, the Ministry of Finance, in the explanatory note to the draft state budget for 2024, stated that "the envisaged volume of expenditures on pension provision will allow financing the payment of pensions, supplements, and pension increases, which, according to current legislation, are financed from the budget funds, as well as carry out the annual indexation of pensions."
The Ministry of Social Policy proposed to index pensions in 2024 from March 1, as determined legislatively. The size of the indexation will depend on the level of inflation and the average salary, which can be discussed at the beginning of 2024 after receiving statistical data for 2023.
