Sections

Russia moves on reforms as Ukraine seals IMF loan

Related images

  • Russia moves on reforms as Ukraine seals IMF loan

Related Categories

RUSSIA/UKRAINE - Dmitry Medvedev, president of Russia, has confirmed draft laws to shift the country's pension system onto an insurance basis are being finalised, while Ukraine has implemented anti-crisis measures, including balancing of the state pension fund, to secure continued IMF funding.

Medvedev confirmed at a press conference with Alexander Shonkin, president of the Russian Union of Industrialists and Entrepreneurs, earlier this week that pension reform is a key issue for the government.

"We will also examine the pension reform issue, which is one of the subjects at the centre of the government's attention right now", said Medvedev in his earlier speech, while at an economic meeting held yesterday the President discussed proposed reforms to improve the pension system.

Medvedev confirmed the "relevant draft laws are being finalised and that as of next year the principles of forming the pension system receipts will change".

He revealed the existing "unified social tax" will be replaced by insurance contributions and the development of an insurance-based pension system, which it is claimed will make the pension system "better, more efficient and more reliable".

He said the aim is to have all retired people receiving at least 40% of their previous earnings by 2020. He added this would include income from voluntary pension saving through a system of private pension funds although he admitted this sector of the pension industry needs more support and development.

Russia currently has two sovereign wealth funds following the split of its stabilisation fund into the National Welfare Fund and the National Reserve Fund. Initial proposals for pension reform included the suggestion that 0.6% of GDP would be paid from the welfare fund into the state pension fund until 2023 to help meet pension liabilities, although Medvedev's latest comments are the first sign that reforms are actually in progress. (See earlier IPE article: Russia gets to grip with ailing system)

In Ukraine, meanwhile, Yulia Tymoshenko, the prime minister, has implemented a series of anti-crisis resolutions to help revive the economy and trigger the second tranche of an IMF loan, despite parliament refusing to pass the measures.

The Verkhovna Rada - the Ukrainian Parliament - yesterday failed to agree the programme of "bail-out resolutions" so instead Tymoshenko called a "special sitting of the government" to approve the plans.

The measures are aimed to curb state expenditure and reduce the budget deficit, and included balancing the costs of the state pension fund.

Under this "speciall sitting" Tymoshenko claimed the decisions were backed unanimously and do not need to be approved by Parliament.

She said: "We have found possibilities with resolutions of the government to regulate all the issues joined with balancing of the Pension Fund and Naftogaz of Ukraine NJSC. We won't submit analogous draft laws to the Parliament anymore."

Ceyla Pazarbasioglu, head of the IMF mission in Ukraine - which flew in last week to continue talks on releasing the second tranche of its loan - said the government decisions "are destined to make the future of the country more optimistic", and added "it is evident the government has exerted all the forces to resume financial balance in the two, mainstream state institutions - the Pension Fund and Naftogaz of Ukraine NJSC".

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • DS-2487

    Closing date: 2018-11-22.

  • QN-2489

    Asset class: Alternatives.
    Asset region: Global.
    Size: $100m.
    Closing date: 2018-11-30.

  • QN-2491

    Asset class: Alternatives.
    Asset region: Global.
    Size: $20m.
    Closing date: 2018-11-30.

Begin Your Search Here