The Ministry of Economy forecasts inflation in 2005 at the level of 11.2-11.4% in the event of the adoption of the necessary amendments to the state budget for the current year and with unchanged monetary policy. This was stated by Economy Minister Serhiy Teriokhin, reports "Ukrainian News". \n \n"In the event that the changes to the budget that we are preparing are adopted at the end of March, then according to the macro-indicators based on... unchanged monetary policy and the fiscal-budgetary policy that will exist after the changes (to the budget), we arrive, unfortunately, at an inflation level of more than 11% - 11.2-11.4%," said Teriokhin. \n \nCommenting on the steps that must be taken to reduce inflation, Teriokhin noted that the Ministry of Economy is holding talks with the National Bank on establishing a more flexible hryvnia exchange rate. "If there are no changes regarding exchange rate formation - there will be 11.2%-11.4% (inflation). If we nevertheless agree with the National Bank to ambitiously begin a program of a floating rate or a partially floating rate - inflation can be reduced," explained Teriokhin. At the same time, he added that the specific amounts of reduction of the forecast inflation can be known only upon reaching specific agreements with the National Bank. \n \nRecall that in January the International Monetary Fund worsened its forecast for inflation in Ukraine in 2005 from 8.1% to 9.5%. Director of the IMF European Department Michael Deppler, following his visit to Ukraine in February, stated that the IMF is concerned about the high projected level of the state budget deficit, as well as the existing level of inflation in Ukraine, and considers it necessary to take measures to reduce them. \n \nIn January of this year, inflation was 1.7%. In 2004, inflation was 12.3%, in 2003 - 8.2%.