Poverty and Social Impact Analysis of Increased Natural Gas Prices and Selected Social Guarantees in Ukraine

PEP Working Paper Series 2013-12

28 Pages Posted: 10 May 2018 Last revised: 12 Jul 2018

See all articles by Oleksandra Betliy

Oleksandra Betliy

Institute for Economic Research and Policy Consulting

Veronika Movchan

Institute for Economic Research and Policy Consulting

Mykola Pugachov

Institute for Economic Research and Policy Consulting

Date Written: October 1, 2013

Abstract

To date, prices of gas and other energy used by households in Ukraine have been generously subsidized by the Government. However, suppressed energy prices lead to excessive use of gas and an inefficient level of investment into energy savings. In addition, Ukraine’s dependence on imported gas contributes to trade imbalances and growing pressure on the devaluation of the national currency. Thus, the issue of raising gas prices remains critical for the population of Ukraine. In particular, this step was also envisaged in an ambitious reform agenda announced in mid-2010 aimed at restoring stable and high economic growth. However, this policy may have an unprecedented impact on the welfare of population. This paper presents the main findings from the simulation of gas price shocks, provides an overview of social support programs in Ukraine and analyses their efficiency. Based on the analyses, the paper draws two major conclusions. First, increases in gas prices result in welfare losses in all household categories, with a more profound impact on urban households. Second, the current social welfare programs are not very efficient in targeting the poorest households. Reform of the social welfare system is thus required to ensure a safety net for poor households in times of gas price hikes. In order to assist national decision-makers in solving these issues the paper presents general policy recommendations.

Keywords: gas price shock simulation, welfare programs, social support programs

Suggested Citation

Betliy, Oleksandra and Movchan, Veronika and Pugachov, Mykola, Poverty and Social Impact Analysis of Increased Natural Gas Prices and Selected Social Guarantees in Ukraine (October 1, 2013). PEP Working Paper Series 2013-12, Available at SSRN: https://ssrn.com/abstract=3168006 or http://dx.doi.org/10.2139/ssrn.3168006

Oleksandra Betliy

Institute for Economic Research and Policy Consulting ( email )

Reytarska 8/5-A
01034 Kyiv
Ukraine

Veronika Movchan

Institute for Economic Research and Policy Consulting ( email )

Reytarska 8/5-A
01034 Kyiv
Ukraine
+38-050-951-8496 (Phone)

HOME PAGE: http://www.ier.com.ua

Mykola Pugachov (Contact Author)

Institute for Economic Research and Policy Consulting

Reytarska 8/5-A
01034 Kyiv
Ukraine

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