IMF secures reform commitment from Ukraine after bailout warning

By Tim Ahmann and Alessandra Prentice WASHINGTON/KIEV (Reuters) - Ukraine's president on Thursday told the International Monetary Fund he was committed to pursuing reforms to keep Kiev's $17.5 billion IMF bailout on track, after a sharp warning from the lender that the funds were at risk. The warning followed the shock resignation last week of the economy minister, Aivaras Abromavicius, which highlighted divisions inside the ruling coalition and its patchy performance on reforms promised under the IMF programme. "Without a substantial new effort to invigorate governance reforms and fight corruption, it is hard to see how the IMF-supported programme can continue and be successful," IMF chief Christine Lagarde said in a statement. In an apparent reference to Abromavicius's complaint that vested interests still dominated Ukrainian policymaking, Lagarde said she was concerned about slow progress on corruption. Later, however, Lagarde and Ukrainian President Petro Poroshenko spoke by telephone and agreed to draw up a "roadmap" aimed at keeping reforms moving forward. "The president noted the necessity of rebooting the government without snap elections, which would only deepen the political crisis and worsen conditions for carrying out reform," a statement on Poroshenko's official website said. In a separate statement, Lagarde said Poroshenko "reassured me of his unwavering commitment to reforms, including improving governance and fighting corruption." "We agreed on the principle of a roadmap of actions and priority measures to ensure prompt progress," she said. POLITICAL GAMES Ukraine's Western backers have warned it not to repeat the mistakes of the past when the euphoria of 2004's pro-European "Orange Revolution" eroded amid government infighting and a failure to stamp out graft. The central bank said it was vital Ukraine continued to work with the Fund and other foreign donors, who together had come forward with an international bailout totalling $40 billion. "Further delay in resuming cooperation with the IMF could have negative consequences as much for the financial stability of our country as for the welfare of citizens," it said. Ukraine has been waiting since October for a third tranche of IMF loans, worth $1.7 billion, but slow reforms and political squabbles have delayed its disbursement. The government's approval ratings have tumbled over concerns about the pace of change and it could face a no-confidence motion in parliament in mid-February. The political crisis has weighed heavily on the Ukrainian bond market and has helped push the hryvnia currency close to 11-month lows. (Additional reporting by Pavel Polityuk and Natalia Zinets; Editing by Gareth Jones and Meredith Mazzilli)