IMF board says would give Ukraine less money next time

Anna Yukhananov
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By Anna Yukhananov

WASHINGTON (Reuters) - The International Monetary Fund's board said Ukraine should get less money in any future program with the fund, compared to the $15 billion it got in 2010, according to a statement released on Thursday.

The board, which discussed Ukraine's economy and its lapsed IMF program on Monday, also said the Ukrainian government in the future should be required to implement more economic reforms before it gets any IMF money.

The board discussion took place a day before Kiev, desperate for cash to cover a big external funding gap, received a $15 billion bailout from Russia. The IMF had declined to give Ukraine more money until the government agreed to tough economic reforms, including reducing energy subsidies.

The IMF froze a $15 billion standby credit program with Ukraine in 2011 after Kiev reneged on commitments to raise domestic gas prices. Ukraine only got a few payments, but it will still owe the Fund about $4.2 billion by February.

The IMF blamed "insufficient ownership" for the program's failure two years ago.

"Directors agreed that, in view of Ukraine's track record, arrangements with lower access and strong prior actions would be most appropriate," according to a summary of the IMF board discussion.

Most board members also thought that any future aid program for Ukraine should be shorter, which would make it easier to complete. Ukraine's 2010 program was supposed to last for 29 months.

The IMF's 24-member board, which represents its 188 member countries, also concurred with the IMF staff in their prior criticism of Ukraine's economic policies.

They called on Kiev to cut its large fiscal deficit, phase out energy subsidies, strengthen the banking sector, and allow the exchange rate to fall.

"Despite the Ukrainian authorities' efforts to maintain macroeconomic stability amid worsening economic conditions, the current macroeconomic policy mix has generated large external and fiscal imbalances and has contributed to deepening the recession," the IMF directors said in the statement.

(Reporting by Anna Yukhananov; Editing by David Gregorio and Chizu Nomiyama)