KYIV, Nov. 19 - Ukraine is adjusting to the IMF demands and changing its legislation on bank insolvency to make it illegal for insolvent banks to return to their former owners, government officials have said.

The IMF is specifically focused on the 2016 nationalization of Ukraine's largest lender, PrivatBank, and seeks to make sure it won’t be reversed.

While President Volodymyr Zelenskiy has said his administration would make "every effort” to recover government funds spent on compensation to the depositors of failed and nationalized banks, the IMF wants to know the exact mechanism of how Ukraine would do it.

Ukraine’s new banking law that is yet to be approved by Parliament would end the often lengthy legal insolvency disputes between the state and former owners of failed banks. According to the law draft, once acquired, insolvency disputes would be sent straight to the Supreme Court.

If approved, the new law would allow the government to sell the assets of insolvent banks almost immediately and if the insolvency were later found to be unlawful by courts the government would compensate the former owners with money payment, but won’t return the assets.

Ukraine spent about $3.7 billion to repay clients of its failed banks since 2012, according to the government data. It has also spent about $6.4 billion to refinance the nation’s largest lender PrivatBank before the government took over it under previous administration led by President Petro Poroshenko. The bank was owned by billionaire Ihor Kolomoisky, a close ally of President Zelensky. Kolomoisky seeks to regain control over the bank after it was transferred into state ownership due to insolvency.

Ukraine seeks a $2 billion a year 2019-2021 lending program from the International Monetary Fund and is willing to implement further reforms, including in its banking sector, said the nation’s finance minister Oksana Markarova after meeting IMF officials in Kyiv.

"It is vital for us to remain in the IMF program because it shows other financial institutions that we are reliable. As long as we are with the IMF, all the institutions give us money, and it is precisely that money that refills the budget," Markarova said. (nr/ez)