Ukraine 'very close' to getting next IMF loan tranche: FinMin

August 30, 2016 12:38 PM EDT

Ukraine's Finance Minister Oleksandr Danylyuk speaks during an interview with Reuters in Kiev, Ukraine, April 28, 2016. REUTERS/Valentyn Ogirenko

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By Sabine Siebold

BERLIN (Reuters) - The International Monetary Fund (IMF) is very close to releasing a tranche of aid that would unlock around $2 billion in extra money, Finance Minister Oleksandr Danylyuk said on Tuesday.

A $17.5 billion bailout program has helped Ukraine pull itself out of two years of economic recession caused by a separatist conflict in its industrial east. But a third tranche has been delayed since last October due to political upheaval and patchy reform progress.

"We are very close and that's important for us because its an important signal for the markets, for investors and it unlocks other financial support," Danylyuk told Reuters in an interview in Berlin where he was due to meet his German counterpart Wolfgang Schaeuble.

Danylyuk declined to be more specific on the timing of the tranche, originally envisaged worth $1.7 billion but now expected to be around $1 billion. But he said that once the IMF had released it, the Ukraine would receive $1 billion for the budget which would be guaranteed by the United States.

In addition, there would be other financial assistance of 600 million euros and some loans for purchasing gas.

Months of political infighting have held up IMF-backed legislative changes aimed at limiting the power of vested interests and modernizing the economy.

Danylyuk said the launch of an e-declaration system to improve transparency of the income and assets of public officials, linked to the IMF deal, would go smoothly after some problems this month.

"On Sept. 1 this system will be launched fully, which is in line with all our international obligations. And, what is more important, which is in line with our ambitions," he said.

Asked about what the effect would be if the IMF did not release the tranche, Danylyuk said he was not worried.

"We would have some payments which are due, which we could pay. We have no problems with that at the moment. The most important issue is that ... we need a decision of the board that our cooperation continues and that we are working as partners to implement reforms which are important for Ukraine."

Danylyuk said the Ukraine government was committed to implementing a wide-ranging reform agenda. First, an energy reform must be completed, including the full market liberalisation of the gas sector from April followed by a market reform of the electricity market.

Other priorities include overhauls in Ukraine's health and education systems, as well as a budget reform.

"We need (reforms) on a number of issues, we can't just do one reform a year," he said.

(Writing by Madeline Chambers; Editing by Raissa Kasolowsky)

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