IMF to visit Ukraine for talks on $15 billion loan

An International Monetary Fund mission will visit Ukraine at the end of this month to resume talks with the Kiev government on a new $15 billion loan program, the Fund said on Thursday.

Kiev has been in negotiation with the Fund since January on a new deal to help it service foreign debt repayments set to peak at about $9 billion this year. Money owed by Ukraine to the IMF itself accounts for about two-thirds of that sum.

Ukraine has, to date, signed seven loan deals with the Fund.

But the last one, which was also for $15 billion, was suspended in early 2011 part way through when President Viktor Yanukovich's government refused to make Ukrainian households pay more of the real cost of the gas it buys from Russia.

The Fund has urged Ukraine to cut gas and heating subsidies for households in order to curb a ballooning budget deficit. But Yanukovich last month once again pledged not to raise gas prices, casting doubt on the prospects of a new IMF deal.

"At the request of the authorities, an IMF mission ... will visit Ukraine from March 27-April 10 to continue negotiations on a new Stand-By Arrangement (SBA)," Max Alier, the IMF's representative in Ukraine, said in a statement on Thursday.

Ukraine's budget deficit doubled last year to $6.7 billion or 3.8 percent of gross domestic product as the government increased welfare payouts and other spending in the run-up to a parliamentary election last October.

The Fund also says the Ukrainian hryvnia, pegged at about 8 per dollar since early 2010, is overvalued and it wants Kiev to allow greater exchange rate flexibility.

(Reporting by Olzhas Auyezov; Editing by Richard Balmforth)