(Combines stories, adds details)
KIEV, July 18 The International Monetary Fund
expects to decide within weeks on issuing the second tranche of
a $17-billion bailout to Ukraine, whose economy is likely to
contract by 6.5 percent this year, its Kiev mission chief said
Ukraine, which is fighting a pro-Russian separatist
rebellion in the east, received $3.2 billion in May as the first
tranche of the two-year aid package intended to shore up
depleted foreign currency reserves and support the state budget.
"The mission has reached an understanding with the Ukrainian
authorities on the policies necessary for the completion
of the first review under the standby agreement... We expect
this process to be completed within few weeks," said mission
chief Nikolay Gueorguiev.
He said the tranche could total $1.4 billion although his
forecast that the Ukrainian economy would contract by 6.5
percent this year was a larger fall than the previously
estimated 5-percent decline.
Ukraine's economy stagnated in 2013. Economists have said
its economy will slide deeper into recession this year, despite
an IMF aid deal, as a pro-Russian rebellion cripples activity in
the industrial east and scares off foreign investors.
The IMF approved its bailout for Ukraine in April to help
the country's economy recover after months of upheaval,
unlocking further credits from other donors of about $15
Ukrainian Prime Minister Arseny Yatseniuk said on July 9 he
expected Kiev to receive the second tranche because it was
fulfilling all the criteria.
Kiev also says the IMF should take into account the large
costs Ukraine is incurring while fighting the pro-Russian
separatist rebellion in the east of the country.
(Reporting by Natalia Zinets,; Writing by Gabriela Baczynska,
Editing by Timothy Heritage)