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Yanukovych Assures IMF On Budget Targets

The IMF has urged Yanukovych to speed up economic reforms.
KYIV (Reuters) -- Ukrainian President Viktor Yanukovych today assured the International Monetary Fund that his country is on track to meet its budget deficit targets as it seeks a fresh $19 billion loan.

Ukraine needs IMF money to help its economy recover from a 15 percent slump in 2009, but the Fund has said it wants more ambitious targets on fiscal tightening and curbing inflation.

Meeting a visiting IMF mission, Yanukovych said first-quarter economic growth and cost-cutting measures had bolstered government finances.

"Budget revenues in the five months [of 2010] have grown by 8.8 percent," the presidential administration quoted him as saying.

Ukraine adopted a 2010 budget deficit target of 5.3 percent of gross domestic product and has said it will reduce it by one percentage point a year. The IMF has urged faster tightening which Yanukovych said was achievable.

"Looking at the dynamics of the budget, we feel, we are confident the deficit will be smaller," he said.

Poul Thomsen, Deputy Director of IMF's European department, said economic recovery and growing budget revenues were "a good sign," according to the presidential administration.

Analysts say Yanukovych's unwillingness to press ahead with painful reforms such as raising utility tariffs shortly after coming to power in February may be one of the main hurdles in the IMF loan talks.

Government officials this week said they were confident about getting the IMF stand-by facility but added Ukraine had other options such as getting loans from Russia.

Ukraine's key export sectors of steel and chemicals took a battering in the global downturn and the Yanukovych administration says a new IMF credit program will help to get the economy back on to its feet and to restore competitiveness.

The IMF last year suspended Ukraine's $16.4 billion rescue program because the administration of former President Viktor Yushchenko, who was at odds with his government, reneged on promises of financial restraint.

Yanukovych's top economic aide told Reuters that Ukraine will restart halted privatizations by selling its fixed-line telecom monopoly UkrTelecom this year and privatizing coal mines and agricultural land.