Cabinet consulting with NBU and IMF on possibility of reducing inflation forecast for 2021

The government of Ukraine, which laid down an inflation forecast of 7.3% in the draft state budget for 2021, is consulting with the National Bank of Ukraine (NBU) and experts from the International Monetary Fund (IMF) about the possibility of revising this forecast to make it consistent with the target inflation corridor of the NBU of 5% plus/minus one percentage point, a source close to the government has told Interfax-Ukraine.

"This year, the government expects inflation of about 4%, maybe a little less. Next year they set a forecast of 7.3%, while the National Bank has a target of 5% plus/minus 1%, so consultations are underway on the possibility of revising the inflation forecast to 6%," the source said.

He noted that the complexity of such a revision lies in the fact that a decrease in the inflation forecast widens the gap in terms of the deficit, which the government has already set at a fairly high level of 6% of GDP.

The source recalled that earlier this week, Prime Minister Denys Shmyhal held a telephone conversation that lasted more than an hour with the leadership of the IMF's European department, and the government would like to obtain a visit from the fund's online mission for the first review of the Stand-By Arrangement in October and ensure the receipt of the second tranche by the end of the year.

The Ukrainian side convinces the IMF that the fund's fears regarding the independence of anti-corruption bodies will be removed after open tenders, as such fears were removed after the change of the head of the National Bank.

Source: www.en.interfax.com.ua