IMF mission starts second review of Ukraine programme

FILE PHOTO: The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., September 4, 2018. REUTERS/Yuri Gripas/File Photo

KYIV (Reuters) - An International Monetary Fund monitoring mission started work on Monday to review an ongoing multibillion dollar programme for Ukraine, as Kyiv seeks over $41 billion in international aid to cover its budget gap next year.

The IMF mission started policy talks with the Ukrainian officials on the $15.6 billion Extended Fund Facility (EFF) loan, the Fund said in a statement. The programme is part of a $115 billion global package to support the economy as Ukraine battles Russia's invasion.

"We are committed to a constructive analysis of the completed work and fruitful discussion on the next steps. The review will not be easy, but Ukraine's team has been working smoothly and effectively for over 20 months of the large-scale war," said Ukraine's central bank governor Andriy Pyshnyi.

"We clearly understand the critical need to maintain IMF's support not only for further budget needs financing, but for the country's development and its European future."

Ukraine which applied to join the European Union days after Russia invaded in February 2022, sees membership as a top priority.

Pyshnyi said on the Telegram messaging app that the discussions would touch upon the situation in the financial sector and the foreign exchange market, the results of an assessment of the banking sector, and how to finance the budget deficit.

Ukraine depends heavily on international aid to cover its budget gap and finance social and humanitarian spending.

Finance Minister Serhiy Marchenko told Reuters that Ukraine was finding it harder to secure financial support as the world's attention shifts and geopolitical tensions heighten.

The government has received $35.4 billion so far this year from partners to cover its budget gap. Last year, Ukraine got $31 billion, finance ministry data showed.

Prime Minister Denys Shmyhal has said the government plans to reduce the budget deficit for 2024 from its initial target thanks to a better forecast for economic growth as businesses and the economy adjusted to the wartime situation.

But Ukraine still needs about $41 billion in international aid to cover the gap. Parliament is due to vote for the 2024 draft budget in the second reading this week, lawmakers said.

This week Kyiv expects an EU assessment on how far it has advanced in fulfilling economic and legal criteria to clear the way for accession talks. Judicial reforms and steps to fight corruption and improve transparency were in focus for the EU.

(Reporting by Olena Harmash; Editing by Hugh Lawson)

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