NBU Council head points out absence of risks for macroeconomic stability after increase of minimum wage

Chairman of the Council of the National Bank of Ukraine (NBU) Bohdan Danylyshyn has said that there are no risks for macroeconomic stability after the increase of minimum wage since the start of the year from UAH 1,600 to UAH 3,200 a month.

"I think that the increase of minimum wage was a right step of the government in the labor remuneration system and increasing standard of living of the population. I do not see large risks for macroeconomic stability in the increase of minimum wage: inflation forecasts remain within the target benchmarks," he told Interfax-Ukraine.

He said that the increase of minimum wage would have a positive medium effect on economic growth.

"Growth of minimum wage would result in the increase of average nominal wage by 23% in 2017, according to our estimates. This would add around 0.5 percentage points to GDP growth," he said.

Danylyshyn said that the government should take some measures to stimulate development of small and medium-sized enterprises (SME), which would face the increase of general expenses after it.

"The measures should aim at the program that would stimulate development of SME that would have a large multiplying effect on the entire economy," he said.

Later along with the expected increase in the pace of economic growth in 2017 the banking system would be able to support these measures.

"Now the banking system purification policy is ending, and we would have an effectively operating banking system which would be able to switch to crediting of SME programs," he said.

Danylyshyn said that there are other risks in the economy linked to retained high pace of industrial price growth.