Ukraine is expected to gradually bring utility tariffs to market-based levels over several years, but the timing and parameters of their adjustment are an area of uncertainty, the NBU said in its quarterly inflation report for April 2024, UNN reports.
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"It is expected that utility tariffs will be gradually brought to economically justified levels over several years. At the same time, given the difficult situation in the energy sector, subsidized electricity tariffs for household consumers may grow faster. In particular, this forecast assumes a fairly rapid and significant increase in electricity prices. This will create additional pressure on prices and the need to increase subsidies for the population," the NBU said.
At the same time, the National Bank noted that "a prolonged postponement of decisions on raising utility tariffs will lead to lower inflation, but will accumulate quasi-fiscal imbalances and worsen the financial condition of state-owned energy companies." "This will increase the risks of instability in the domestic energy market, worsen the investment potential of the industry, while price pressure will only be postponed to the future," the NBU noted.