KYIV, Nov 27 - The Cabinet of Ministers has agreed to reduce the deficit in the draft national budget for 2021 from 6% to 5.5% of GDP, potentially meeting demand from the International Monetary Fund, Prime Minister Denys Shmyhal said.

"A possibility has been found to reduce the budget deficit to GDP from 6%, as proposed at first reading, to 5.5%," he said at an extraordinary government meeting on Thursday.

The high deficit target in the 2021 budget draft was repeatedly criticized by the IMF as one of the obstacles to resumption of lending. However, the budget deficit was not the only problem with others in realm of fighting corruption and central bank independence, suggesting the government is far from meeting the IMF’s overall requirements.

The latest measure reduces the deficit by UAH 24 billion, to UAH 246.35 billion. In the initial draft, state budget revenues were determined at the level of UAH 1.071 trillion, expenses - UAH 1.331 trillion.

The new wording of the bill provides for UAH 1.092 trillion in revenues and UAH 1.328 trillion in expenses.

The changes to the 2021 budget draft come days after Finance Minister Serhiy Marchenko said that Ukraine and the IMF have been making “significant progress in the negotiation process” over resumption lending.

Marchenko added that the ministry is currently finalizing main 2021 budget indicators that will be included in the budget draft that will soon be submitted to Parliament.

Ukraine was originally expecting to receive $1.4 billion from the IMF in the second half of the year, but some economists see it unlikely for the country to get any IMF loans by the end of the year.

Tymofiy Mylovanov, a recently appointed advisor to presidential office’s chief of staff and a former economy minister, said recently that “There will be no tranche this year. It’s unrealistic.”

The IMF disbursed $2.1 billion in June after approving $5 billion loan deal to help Ukraine fight coronavirus pandemic.

Kyrylo Shevchenko,the governor of the National Bank of Ukraine, led a Ukrainian government team for talks with the IMF in Washington November 9-November 12, but the talks have produce little progress.

IMF Managing Director Kristalina Georgieva, in a phone call with President Volodymyr Zelenskiy on November 17, told the Ukrainian leader the parties have agreed on what needs to be done before and IMF team can come to Kyiv for loan review. (tl/ez)