IMF begins new review of war-torn Ukraine's $15.5 billion loan

KYIV (Reuters) -An International Monetary Fund monitoring mission started a new review of its $15.5 billion program to Ukraine on Tuesday, with discussions expected to focus on the war-torn economy and budget needs, the lender and Ukrainian officials said.

IMF said in a statement that the policy discussions would be part of its eighth review of its four-year Extended Fund Facility program.

"We look forward to constructive and substantive discussions. We are starting from good positions," said Central Bank Governor Andriy Pyshnyi. "The programme remains a particular factor of resilience for us, especially during this time."

More than three years of the war against Russia have devastated the Ukrainian economy. Millions of people fled the fighting, cities and infrastructure were bombed, and exports and supply chains were disrupted.

In the first year of the war, Ukraine's gross domestic product fell by nearly 30%. It is still lower than its pre-war levels, but delivered modest growth in 2023 and 2024.

Pyshnyi said the talks were expected to touch on how to finance Ukraine's budget needs and ensure debt sustainability, both via attracting financing from partners and mobilising domestic revenues.

Government officials said Ukraine's budget needs had been secured for 2025 thanks to financial aid from partners but uncertainty is growing over international economic support for the next year.

Ukraine spends the bulk of its domestic revenues to finance its defence efforts and relies on financial support from Western allies to finance humanitarian and social spending. Ukraine's budget deficit is planned at about $38 billion this year.

Officials would also discuss the financial sector and further reforms needed to strengthen its stability, including state regulations of credit bureaus and developing financial market infrastructure, Pyshnyi said.

(Reporting by Olena Harmash; Editing by Saad Sayeed)