IMF, Ukraine fail to reach pact on next bailout tranche

WASHINGTON (Reuters) - The International Monetary Fund said Friday it had productive discussions with officials in Ukraine this week, but failed to reach an agreement that would pave the way for Kiev to receive its next bailout tranche next month. "We found that the Ukrainian authorities are preparing to move decisively on a broad and comprehensive agenda to stabilize and reform the economy, while coping with the difficult challenges that emerged in the last year," IMF mission chief Nikolay Gueorguiev said in a statement. "In this context, we advanced substantially our mutual understandings of policy priorities going forward," he said, adding the IMF mission would return to Kiev in January for further talks. Ukraine so far has received two tranches under the IMF program, worth a total of $4.6 billion (2.94 billion pounds), under a bailout program agreed in April to shore up the country's foreign currency reserves and support its economy. The IMF had been expected to release the next tranche in January, but the continuation of talks suggests it may be delayed further. The IMF earlier had to delay talks until Ukraine's parliament elected a new government this month. Kiev's foreign currency reserves have more than halved since the start of the year and are at a ten-year low due to gas debt repayments to Russia and efforts to support its struggling currency, the hryvnia. Ukrainian Prime Minister Arseny Yatseniuk said Kiev, facing a pro-Russian rebellion in its eastern territories, risks defaulting unless Western donors come up with more funds. The European Union said on Wednesday that IMF estimates show Ukraine would need an additional $15 billion, on top of an IMF-led package worth a total of $27 billion. It is not clear where that money would come from, as the EU said it has only limited capacity to help, and the IMF may be reluctant to continue shouldering the bulk of the burden. (Reporting by Timothy Ahmann and Anna Yukhananov; Editing by Chizu Nomiyama, Bernadette Baum and Meredith Mazzilli)