To raise salaries, Tymoshenko must bring Stelmakh to heel

October21200920:04

The cabinet will be able to raise minimum wages and pensions only at the expense of other budgetary expenditure or by getting the Central bank to print money, Oleksandr Zholud, an economist from the International center for Perspective Research, told ZIK Oct. 21.

The expert pointed to the need to specify sources of funding before tabling a payments bill. However, the one initiated by the Party of Regions on Oct. 20 gave no information whatever about the sources for its funding.

In this case, the only way to pay for the proposed hikes is to raise taxes, cut other expenditure or increase a budget deficit, Zholud says.

The budget deficit can be offset with the help of the Central bank, but the relationship of the cabinet with president-appointed Governor Stelmakh is less than cordial.

It is a matter of guesswork whether Premier Tymoshenko can pressure the bank to allocate the funding, the expert noted.

He warns that the growing incomes may lead to higher inflation. However, there is no serious threat the inflation will get out of hand as the cabinet has introduced caps on the prices of essential pharmaceuticals, transport services and utilities, Oleksandr Zholud argues.