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Ukraine loan in limbo as IMF team leaves
Journal Staff Report

KYIV, Sept. 20 - An IMF mission has left Ukraine without announcing a deal on new aid but a top central bank official said on Thursday he expected an agreement "in the near future" that would help preserve financial stability during 2019, an election year, Reuters reported.

Analysts expressed surprise at the lack of an IMF statement at the end of the visit, which ran from Sept. 6 to 19.

The IMF has been pushing Ukraine to raise household gas prices, which have been kept artificially low since Soviet times, to market levels. It was not immediately clear whether the two sides had made progress in their talks on this issue.

"There are productive negotiations on the new program. Significant progress has been made. We expect results in the near future," Deputy Central Bank Governor Oleh Churiy told Reuters, in the first public comments by a senior Ukrainian official a day after the mission concluded its visit.

"(There are) talks on a new IMF program that will allow Ukraine to pass the election year freely and maintain financial stability," Churiy said.

A new agreement would give the government some breathing space to manage its debt payments, which are set to peak over the next two years. It would help keep the currency stable and retain the confidence of investors and Ukraine's foreign allies.

It would replace a $17.5 billion aid-for-reforms program that has propped up Ukraine's economy since 2015 through a sharp recession following Russia's annexation of Crimea and the outbreak of separatist fighting in the Donbas region.

"We've had a staff team in Kiev, discussing with the Ukrainian authorities the continuation of our efforts to support policies and reforms, support macroeconomic stability and growth in Ukraine, and on possible financial assistance from the Fund," IMF spokesman Gerry Rice told reporters.

"I don't have any further detail on those discussions, which are ongoing as I said, and I don't have a specific date for the conclusion."

He did not say whether the IMF had offered Ukraine a new standby agreement or whether the conditions for such a deal would differ from the old one.

IMF aid has been frozen since April 2017 as Ukraine welched on commitments to raise household gas tariffs -- a potential vote loser next year -- and slammed the brakes on reforms to tackle entrenched corruption and modernize the economy.

The head of Ukraine's state-run firm Naftogaz was quoted earlier this week as saying the government and the IMF had reached an agreement in principle on gas prices, but the Fund has not corroborated the statement.

Analysts say the new standby agreement under discussion could be worth around $4 billion, double the size of the tranche Ukraine was expecting to receive under the old program before it expires next March. (rt/ez)




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