LONDON, Sept. 9 - The expected release of an IMF loan tranche will allow Ukraine to continue liberalizing its foreign exchange regime, including dividend repatriation by investors, according to the chief economic adviser to the country's prime minister.

Kiev will hear on Sept. 14 whether the International Monetary Fund will release the tranche, which could be as much as $1.7 billion and has been delayed since last October due to political upheaval and patchy reform progress.

"I don't know if it will be the full $1.7 billion - there was an argument that it could be divided into parts, but it is a very important signal that Ukraine continues doing reforms," Ivan Miklos told Reuters in an interview on the sidelines of an investment conference in London.

"It is a very important signal for Ukraine as it allows us to continue the foreign exchange liberalization."

The central bank imposed restrictions on interbank foreign exchange markets two years ago to limit foreign currency outflows, including curbs on foreign investors repatriating profits and dividends.

The bank earlier this year said it would gradually allow investors to repatriate 2014 and 2015 profits, and also lowered the level of mandatory sales of foreign income for companies to 65 percent from 75 percent.

Miklos confirmed the liberalization process would be gradual but expected that dividend repatriation - a key point for foreign investors - would "certainly" be part of the next steps following the receipt of the IMF money.
The IMF tranche should unlock an additional $2 billion of loans from Western countries.

Miklos said Ukraine remained committed to reforms and to the IMF program, demonstrating this through this year's one-step energy tariff liberalization.
The government is due to submit its draft budget to parliament on Sept 15.

"The government is preparing a realistic budget. The budget deficit will be, under the framework of the program, under 3 percent," Miklos said. (rt/ez)