OREANDA-NEWS. On November 12, 2007 the Finance Ministry has denied that the foreign loans received by the government had any negative impact on inflation, reported the Official website www.kmu.gov.ua.

The response came in the wake of the statements made by former finance minister Viktor Pynzenyk, who attributed the growth of prices on the domestic consumer market to the government's policy in regard to foreign loans, a statement circulated by the Finance Ministry says.

The current government accepts loans in the volumes necessary for servicing the foreign debt. "That is, by accepting cheaper loans today the state pays off the more expensive loans of the previous years," the statement says.

Since the start of 2007 Ukraine has attracted UAH 2,525,000,000 or 42,1 percent of its annual plan of foreign loans. As much as UAH 5,416,200,000 of budget funds was used to pay off the previously accumulated foreign debts. Therefore none of this year's borrowings have reached Ukraine's internal market.

"The government's actions to service the state debt could not have spurred the increase in money supply on the domestic market, and consequently, the inflation processes, " the Finance Ministry noted.

Economics Ministry attributes the 11,7 percent inflation in January-October to a coincidence of negative external and internal factors.