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UPDATE 2-Ukraine PM sees two weeks for new IMF deal

* Ukraine, IMF set two weeks for new credit programme

* Government says draft budget for 2010 nearly ready

* It waits for new gas price deal from Moscow

(Adds industrial growth, budget approval expected by May 1)

By Natalya Zinets

KIEV, April 14 (Reuters) - Ukraine and the International Monetary Fund have given themselves the next two weeks to prepare the ground for a new credit programme by the Fund, Ukrainian Prime Minister Mykola Azarov said on Wednesday.

Azarov said this was decided after “successful” talks between President Viktor Yanukovich and IMF chief Dominique Strauss-Kahn in Washington.

“After successful negotiations ... a two week time-scale was set out for preparing a memorandum on a new programme with the IMF,” Azarov told a cabinet meeting.

The ex-Soviet republic is anxious for fresh credit from the Fund to help it recover from the global financial crisis that has hit its main exports of metals and chemicals and hurt investor confidence.

Ukraine has drawn about $10.5 billion under a two-year IMF $16.4 billion bail-out programme already, but the Fund suspended further disbursements late last year because of breached promises of fiscal restraint by the previous leadership of Viktor Yushchenko.

Strauss-Kahn said on Monday after talks with Yanukovich that it was important for the Azarov government to try to pass “a well-grounded 2010 budget to strengthen fiscal sustainability and support the recovery”.

Under pressure from the IMF, the Azarov government has set an ambitious budget deficit goal of 6 percent of gross domestic product.

But the Yanukovich camp has a strong grip on parliament and should have no real problem in getting its draft budget through.

A senior government official said on Wednesday, however, that though the draft budget was “practically ready” to go to parliament, the Kiev government was still waiting for a key element to be resolved -- agreement with Russia on a new price for gas.

Ukraine struggles to meet monthly bills of up to $700 million for imports of Russian natural gas and the new Yanukovich leadership is hoping for a new deal from Moscow that will bring the price down.

“The only question is the price of gas. I think that by the end of this week or by the beginning of next we will resolve this problem,” first deputy prime minister Andriy Klyuev said.

“We have virtually completed preparation of the draft budget,” Klyuev told reporters. Asked when he expected it to be fully adopted by parliament, he replied: “By May 1, everything will be adopted. Don’t worry.”

Klyuev said the government had passed an economic programme for 2010 which foresaw industrial output growing by 5.3 percent compared to a fall of 21.9 percent in 2009.

Analysts said this appeared to reflect a recovery in metals and chemical production. Output of metals rose by 14.3 percent in the first two months of the year compared with a drop of 43 percent for the period in 2009, according to state statistics,

Chemicals production rose by 24.1 percent for Jan-Feb 2010 versus a fall of 42.1 percent for that period in 2009. (Writing by Richard Balmforth, editing by Tony Austin)

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