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UPDATE 1-Ukraine deputy PM says sees IMF tranche in March

Published 02/24/2009, 09:20 AM
Updated 02/24/2009, 09:24 AM

(Adds details)

KIEV, Feb 24 (Reuters) - A Ukrainian Deputy Prime Minister, dealing with foreign affairs issues, said on Tuesday he expected an IMF mission to come back no sooner than next week to talk about the next tranche of a $16.4 billion loan.

An IMF mission left Ukraine two weeks ago without completing its review of the ex-Soviet state's stricken economy, disbursing an $1.84 billion tranche or saying when it will come back.

At the centre of the unresolved talks is a 3 percent budget deficit, which parliament voted through in December despite an IMF condition for a balanced budget.

"There is a reason to hope that next week or in two weeks time an IMF mission will return to Ukraine to continue their study of the stand-by programme," Hryhory Nemyrya told journalists.

"At the end of that study a decision can be taken ... The second tranche will come in March," he said.

Prime Minister Yulia Tymoshenko repeated on Tuesday that any changes to the budget could only be made in May. Several officials have signalled the IMF could accept a budget deficit. Analysts also have said the IMF could soften its stance.

An economic aide to President Viktor Yushchenko -- long at odds with Tymoshenko -- said the IMF was "resigned" to the fact that there will be a deficit this year.

The aide, Oleksander Shlapak, said on Monday what the IMF wanted is for Ukraine to reduce that budget from what it estimated was in fact 5 percent to the 3 percent pencilled in.

The IMF was not immediately available for comment. (Reporting by Yuri Kulikov; writing by Sabina Zawadzki; Editing by Ron Askew)

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