(Releads with strain of defence spending)
KIEV, June 25 Ukraine asked the IMF on Wednesday
to take into account the extra financial burden of fighting an
insurgency in the east as it decides on further disbursement of
aid under a $17 billion bailout programme.
The ex-Soviet republic received a first tranche of about
$3.2 billion from a two-year aid package to shore up depleted
foreign currency reserves and support the state budget. An
International Monetary Fund mission is now in Kiev to review
economic performance before disbursing a second slice of aid.
Prime Minister Arseny Yatseniuk said on Wednesday that he
had "fairly positive hopes" that Ukraine would receive the
second tranche because the government was fulfilling all
But he added that he hoped the Fund would take into account
the strain on the state budget caused by unforeseen defence
expenditure in the conflict with pro-Russian rebels in the east.
"At the start of talks with the IMF ... nobody was expecting
such large expenditure on defence and security," Yatseniuk told
a government meeting.
"Our partners from the IMF will take into account all the
new challenges and complexities that exist in Ukraine," he said.
The two main regions of the rebel uprising, around Donetsk
and Luhansk, together account for nearly 18 percent of Ukrainian
gross domestic product (GDP).
To qualify for IMF aid, Ukraine agreed to abide by
conditions including meeting deficit-reduction targets, raising
the price of gas to households and industry and allowing the
national currency, the hryvnia, to float.
"I have fairly positive hopes. We are fulfilling all the
criteria despite all the difficulties," Yatseniuk said.
The IMF mission, which is scheduled to stay until July 3,
will conduct a first review of the economic programme as well as
Ukraine's future objectives.
(Reporting by Pavel Polityuk; Writing by Alessandra Prentice;
Editing by Richard Balmforth/Ruth Pitchford)