NEW YORK, April 28 – The International Monetary Fund needs more information on the government’s budget and fiscal reforms before deciding on a new multibillion dollar lending program to Ukraine, a senior IMF official said.

John Lipsky, the first deputy managing director at the IMF, said discussions with the government will continue in “coming weeks” when an IMF team returns to Kiev for more talks.

“Outstanding issues remain to be clarified, including fiscal consolidation, in addition to financial sector and other reforms,” Lipsky said in a statement.

The comment is a setback for the government, which has been desperately trying to resume borrowing from the IMF to cover widening budget deficit in Ukraine.

Lipsky made the comments after a meeting with Deputy Prime Minister Serhiy Tyhypko, who had spent almost a week in Washington trying to persuade the IMF to resume the lending.

Tyhypko said Ukraine hopes to qualify for a new lending program from the IMF that will provide 12.5 billion SDR, or about $20 billion, in lending over the next 2.5 years.

On the sidelines of the IMF/World Bank meetings in Washington, Tyhypko has been holding separate talks with the governments of Russia and China in order to secure their backing for the new IMF lending program.

“The Chinese have a major clout,” Tyhypko said.

Meanwhile, the approval of the 2010 budget on Tuesday raises questions to whether the government of Prime Minister Mykola Azarov is capable of implementing the needed reforms.

Viktor Pynzenyk, a former finance minister who quit the government of then Prime Minister Yulia Tymoshenko in February 2009 for her refusal to cut budget deficit, said Azarov has been making the same mistake.

Pynzenyk said Azarov will probably run hidden budget deficit at 170 billion hryvnias in 2010, compared with 100 billion hryvnias that Tymoshenko had run in 2009.

“My forecast is that with the budget like this the IMF will not be lending to the government,” Pynzenyk said in an interview with Channel 5 on Wednesday. “No one will be saving the country. It’s the problem of the country. It must do the treatment.”

The pro-government majority in Parliament approved the 2010 budget without proper debate on Tuesday, the same session that had featured smoke bombs and chicken eggs thrown in the session hall.

Opposition lawmakers unsuccessfully protested ratification of a controversial agreement with Russia that had reduced prices of natural gas in exchange for extending stay of the Russian Black Sea Fleet in Sevastopol by 25 years.

The government forecast the 2010 budget deficit at 57.7 billion hryvnias, or 5.1% of the GDP, but Pynzenyk said the gap will be much wider – at 170 billion hryvnias, or 15.7% of GDP – due to hidden factors.

Among the factors Pynzenyk mentioned 30.5 billion hryvnias to be spent on refinancing of commercial banks, while overestimated budget revenue will widen the budget by another 30 billion hryvnias.

The government will also probably be forced to spend at least 30 billion hryvnias to subsidize natural gas prices for households in 2010 after President Viktor Yanukovych has recently promised to postpone price hike, Pynzenyk said.

Also, some 45 billion hryvnias in state guarantees on loans to well-connected businesses will probably end up converted into budget deficit, Pynzenyk said. “That’s the Ukrainian reality,” he said. (ob/ez)