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Ukraine's pension deficit could reach €1.2bn

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UKRAINE - Victor Yushchenko, president of the Ukraine, has expressed concerns about the calculations used to project the budget for the state pension system as it is suggested the growing deficit could reach UAH13bn (€1.26bn) by the end of this year.

In a meeting with Oleksiy Zarudny, chairman of the Pensions Fund Board, Volodymyr Matviychuk, deputy minister of finance, and Olena Haryacha, deputy minister for labour, Yushchenko highlighted concerns that the pension system's budget had been approved "based on unrealistic economic indices".

He suggested the "unrealistic" figure related primarily to projected income for the system  which had been developed from a payroll figure of UAH313bn, but the president claimed the actual payroll in January and February was nearly UAH3bn lower than predicted.

At the meeting, which was focused on pensions policy and financial planning in the pension system, he revealed specialist calculations suggested the budget deficit of the fund could reach UAH13bn by the end of the year.

Yushchenko said since the beginning of the year officials have already found "significant gaps" between the revenue and expenditure of the pension system, as the income received between January and March totalled UAH33.4bn while expenses came to UAH40.1bn - leaving a deficit of UAH 6.7m.

Figures up to 24 April also suggested this deficit would increase by a further UAH2.9bn, as expenses exceed the monthly income, on top of the UAH7.9bn that the pension system had received from the State budget as a loan.

He argued the problem could be solved through the cooperation of the pension system and government, by altering the state budget and the recalculation of economic indices.

He claimed the figures from the first four months of the year are a "large warning" and added "without active steps, such a tendency may produce unfavourable results and lead to debts in pensions".

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

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