EU funds to Ukraine hinge on constructive work with IMF: Borrell

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KYIV (Reuters) - Ukraine must work “constructively” with the International Monetary Fund to secure 1.2 billion euros from the European Union to cope with the economic fallout of the coronavirus pandemic, the EU’s top diplomat said on Tuesday.

Threats to the independence of law enforcement bodies and the central bank have hobbled a $5 billion IMF deal since it was signed in June and raised red flags with Kyiv’s main Western backers about progress on reforms.

Criticism over the selection process of a new anti-corruption prosecutor also prompted a member of the European Parliament’s foreign affairs committee to say Ukraine’s prized visa-free access to EU countries was under threat.

Western powers have backed Ukraine with aid and diplomatic support after the 2014 Maidan street protests ousted a Moscow-backed president and Russia annexed the Crimea peninsula, but they have repeatedly nudged Ukraine to move faster on reforms.

“We also stand ready to provide 1.2 billion in macrofinancial assistance to help to limit the economic fallout that the coronavirus has created,” EU foreign policy chief Josep Borrell said on a visit to Ukraine.

“And Ukraine needs to constructively engage also with the International Monetary Fund and also the attached conditions about the rule of law of this help,” he told reporters.

The deputy head of President Volodymyr Zelenskiy’s office said it was working on meeting the IMF’s conditions and hoped to hold talks online with an IMF mission.

Asked whether the visa-free regime was under threat, Borrell said the EU had concluded at its latest review in July that Ukraine continued to meet the conditions for it to remain in place.

But it also highlighted the need for ensuring “the independence, effectiveness and sustainability of the anti-corruption institutional framework and avoid politicization of the work of all law enforcement agencies,” he said.

Editing by William Maclean