Ukraine wants to refinance its debt to the International Monetary Fund maturing this year with fresh borrowing from the Fund, Prime Minister Mykola Azarov said on Friday. "At the very least, we want the (IMF) programme to cover our debt repayments to them," Azarov told reporters. Ukraine is due to repay about $3.8 billion to the Fund this year.
The IMF halted lending to the former Soviet republic in early 2011 after it delayed a planned increase in household gas and heating prices, a measure needed to cut its budget deficit. Ukrainian Finance Minister Valery Khoroshkovsky will hold talks with the IMF in Washington next week, Azarov said. "We will do everything to make this programme work," he said. Under a $15 billion programme agreed in 2010, Ukraine was due to receive about $1.5 billion per quarter, mostly in order to boost central bank reserves.
The country depends heavily on imports of Russian gas to supply its households and heating stations which buy fuel at subsidised prices. Reneging on its IMF commitments, Kiev has refused to end or cut those subsidies even as the price of Russian gas rose from $264 per thousand cubic metres (tcm) in the first quarter of 2011 to the current level of $416 per tcm. To ease the burden on the budget, the government has sought to negotiate a discount from Moscow but talks have dragged on for over a year without any concrete results.
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