Ukraine and a team from the International Monetary Fund could reach an agreement on further financial aid for the country's war-battered economy in the next 48 hours, even though talks are proving tough, its prime minister said Wednesday.
The ex-Soviet republic, which is on the brink of bankruptcy after a year of political upheaval and war, is in talks with a visiting IMF team that it hopes will lead to a bigger, longer-term funding plan than its current $17 billion program.
Prime Minister Arseny Yatseniuk made clear the IMF team, which arrived in Kyiv on Jan. 8, was pressing hard for implementation of promised reforms by the government, including overhauling the state gas company Naftogaz, before it returns to Washington to report to the fund's board.
"The negotiations are not easy because no one simply wants to give money away,'' Yatseniuk told a government meeting.
"There are some unresolved issues — the question concerning energy sector reform,'' he said, referring to Naftogaz, which operates a complicated subsidy system under which it sells gas to domestic customers at a lower price than it pays for it, making it a huge financial drain on the economy.
"In the course of 48 hours, I hope talks with creditors [the IMF)] will be concluded,'' he said.
Ukraine's central bank said its governor, Valeria Gontareva, would hold a final press conference with the head of the IMF mission, Nikolay Gueorguiev, and Finance Minister Natalia Yaresko in Kyiv on Thursday.
IMF Managing Director Christine Lagarde said in January that the fund would support a larger package, or extended fund facility (EFF), to plug Ukraine's estimated $15 billion funding gap for 2015, but she did not give exact figures.
The IMF team in Kyiv also appears to be waiting for Ukraine to amend its draft budget for 2015 at the end of February before it reaches a final conclusion.
Agreement on a package could unlock a much larger aid package for Ukraine, which would include loans from the Group of Seven rich industrial nations as well as the fund, according to sources in Washington familiar with talks.
A conflict between Ukrainian government forces and pro-Russian separatists in eastern Ukraine that erupted last April has exacerbated the country's long-standing economic problems.