IMF deputy 'impressed' by Ukraine's move toward reform

WASHINGTON - The International Monetary Fund's number two said on Saturday he was "impressed" by war-torn Ukraine's plans for economic changes aimed staving off bankruptcy and a foreign debt defailt.

The IMF, which this year granted Kiev $17 billion (S$22.3 billion) in financial aid over two years as part of a broader $27 billion global rescue package, has expressed fears that the former Soviet country may need an additional $15 billion in immediate aid.

David Lipton, the IMF's first deputy managing director, travelled to Kiev on Saturday to meet with President Petro Poroshenko, Prime Minister Arseniy Yatsenyuk and members of their economic team.

"I was impressed by their vision for an economic transformation of Ukraine, and by their commitment to decisive, front-loaded implementation of their reform agenda," he said in a statement.

He said an IMF team was expected to wrap up technical discussions by the end of next week, while a mission to conduct policy discussions as part of the Fund-supported programme is set to return to Kiev early next year.

But he gave no indication as to whether additional loans to Ukraine were being planned.

Poroshenko said in a statement posted on his website that he had assured Lipton of Ukraine's commitment to full cooperation with Fund's austerity demands.

He added that Lipton appeared impressed by a new cabinet appointed earlier this month that includes two Western investment bankers - one from Lithuania and the other the United States - serving as economy and finance ministers.

"We now have a very professional team that is focused on results," Poroshenko said in the statement.

Ukraine's foreign lenders, which besides the IMF include the European Union, World Bank and Japan, want deep cuts to welfare services and a hike in energy prices to help balance the books.

The architects of the aid package had hoped to use it as an incentive for Ukraine to wean itself off communist-era subsidies long abandoned by its smaller but now far better-off neighbours in eastern Europe.

The IMF also wanted to see loss-making state firms privatised and graft that has permeated both ministries and local governments comprehensively punished instead of having their wrongdoings swept under the rug.

But few of those steps have yet been taken.