April 16, 2016 / 11:21 AM / 4 years ago

New Ukraine finance minister wants wriggle room in IMF talks

Newly-appointed Ukrainian Finance Minister Oleksandr Danyliuk attends a parliament session in Kiev, Ukraine, April 14, 2016. REUTERS/Valentyn Ogirenko

KIEV (Reuters) - Ukraine could ask the International Monetary Fund to revise the criteria under which it disburses loans to Kiev, the new finance minister, Oleksandr Danyliuk, said in a newspaper interview published on Saturday, without providing specifics.

After months of stalling, Ukraine urgently needs to conclude talks with the IMF to unlock $1.7 billion in new loans that the government will receive in exchange for reforms and ending widespread corruption.

Ukraine’s economy shrank by nearly a tenth last year under the impact of a Russian-backed separatist conflict in its eastern industrial heartland. Inflation has eased but still stood at more than 20 percent year-on-year in March.

Danyliuk took office on Thursday in the biggest political shakeup in Ukraine since the 2013/2014 Maidan street protests brought a pro-Western leadership to power, displacing a U.S.-born technocrat who had been favored by Washington.

The new government, headed by Prime Minister Volodymyr Groysman, has sought to reassure Ukraine’s Western-backers that reforms will not veer off track.

“For obvious reasons, the priority number one is the resumption of cooperation with the IMF,” Danyliuk told the Ukrainian weekly Zerkalo Nedeli, promising to strengthen the role of his ministry as an “engine of reform”.

“If we ensure the growth, but we do not fit a little bit in the framework of the IMF, then during the negotiations, I think, it is realistic to achieve the revision of the criteria,” he said.

Danyliuk’s predecessor Natalia Yaresko earlier this year said that Ukraine’s fight against corruption, pension reform and mending the state finances were on the agenda in the IMF talks.

Reporting by Pavel Polityuk; editing by Matthias Williams and Richard Balmforth

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