Ukraine, bowing to pressure from the International Monetary Fund ahead of a new loan deal, will take the painful step of raising gas prices for households from next month, the government said on Wednesday.

Prime Minister Mykola Azarov said the 50 percent price hike, an unpopular move aimed at cutting the budget deficit, was necessary to secure a new $14.9 billion stand-by facility from the Fund.

"We have to tell people the truth. In these circumstances, we had no other choice than to agree with the IMF on financial support," Azarov said at a televised government meeting.

"In talks with the IMF, the government defended its own vision of ways to combat the crisis and protect the people. But the creditor's position is always stronger than that of a weakened country in need of support."

The price hike will affect about 18 billion cubic metres of gas a year, used for cooking in apartment blocks and heating in small houses. This represents a significant part of the 47-50 billion cubic metres Ukraine consumes every year.

Azarov said the government, which is committed to fighting poverty in the country, would widen the list of poorer households eligible for social security payments to partly offset higher gas bills.

Ukraine reached a preliminary agreement with the IMF this month on a new $14.9 billion stand-by facility needed to plug holes in its budget.

Under the deal, it needs to reduce the consolidated budget deficit to 5.5 percent of gross domestic product this year from the earlier projected 6.3 percent.

The Ukrainian government has to present a letter of intent to the IMF which should lead to approval of the deal by the IMF board and the unlocking of a first tranche of credit, possibly in August.

According to the National Electricity Regulatory Commission, the price of natural gas for customers who consume less than 2,500 cubic meters per year and have gas meters will be 72.54 kopecks per cubic meter (from the current 48.36 kopecks), and for those who do not have gas meters 79.8 kopecks per cubic meter (from 53.16 kopecks) (UAH 7.90 / USD 1).

The price of natural gas for those who consume up to 6,000 cubic meters per year and have gas meters will total 109.8 kopecks per cubic meter (from 73.2 kopecks), and for those who do not have gas meters 120.78 kopecks per cubic meter (from 80.52 kopecks).

Those who consume less than 12,000 cubic meters of natural gas per year and have gas meters will have to pay 224.82 kopecks per cubic meter, instead of the current 149.88 kopecks, and those who do not have gas meters will have to pay 247.32 kopecks per cubic meter, instead of 164.82 kopecks.

Those who consume over 12,000 cubic meters of natural gas per year and have gas meters will pay 268.56 kopecks per cubic meter (from the current 179.04 kopecks), and those who do not have gas meters will pay 295.41 kopecks per cubic meter (instead of the current 196.86 kopecks.)
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