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U.S. sees continued international support for Ukraine: senior official

WASHINGTON (Reuters) - A debt deal between Ukraine and creditors marks a way forward and the United States expects the International Monetary Fund and international community to keep supporting the country, a senior U.S. Treasury official said on Tuesday.

The official, who asked not to be named in order to speak freely, said the IMF, the United States and other advanced economies were committed to supporting Ukraine as long as the country, whose economy has been hurt by the cost of fighting between government forces and Russian-backed separatists, keeps on with reforms.

Ukraine last month reached a deal with creditors to ease repayments on its $18 billion debt, preventing a unilateral debt default and keeping the country on track with its IMF-funded program.

“The agreement that was reached between the government and the ad hoc creditor committee reflects a lot of detailed and difficult work in trying to hammer out a plan that meets the needs of all parties, and represents a way forward that is in the interest of all parties,” the official said.

The United States also expected major creditor Russia to do its part, he said. Russia refused to participate in the restructuring deal and is insisting on full repayment of a $3 billion bond in December.

If Ukraine defaults on that debt, the IMF executive board will have to decide whether the bond is official or commercial debt. If it is deemed official, it would endanger the IMF program, as the Fund cannot lend to a country in arrears to another government.

The official declined to say how the United States, the biggest IMF shareholder, might lean in that debate but said the board had shown strong support for Ukraine because the country met commitments promised under the $17.5 billion, four-year IMF program. U.S. loan guarantees also depend on that program.

“The pattern that we have seen is strong international support for a Ukrainian government that is delivering on its reform commitments,” he said. “That is the pattern I would expect to continue to see from the IMF board as it related to continued financial assistance to Ukraine.”

The United States has twice provided loan guarantees to shore up Ukraine’s economy, which are contingent on the IMF program.

The official said it was important that Ukraine continues to make progress on reforming its economy. The 2016 budget would be an opportunity to reduce the overall government deficit, change the heavily subsidized energy sector and improve transparency.

Reporting by Lesley Wroughton and Krista Hughes; Editing by Sandra Maler