KIEV (Reuters) – Ukraine expects the International Monetary Fund (IMF) to approve a $ 5 billion loan program on June 5 and disburse the first $ 1.9 billion the next day, a Prime Minister Denys Shmygal told Reuters on Friday.

President Volodymyr Zelenskiy said Ukraine was at risk of defaulting without the money, which Shmygal said he expected to be approved at an IMF board meeting. Kiev has struggled for months to pass reforms called for by the fund over concerns over corruption and influence peddling.

The country’s precarious financial situation and the haggling over reform come as Zelenskiy attempts to negotiate with Russia, which annexed Ukraine’s Crimea region in 2014 and supported a pro-Russian uprising in eastern Russia. ‘Ukraine.

The IMF declined to comment on Shmygal’s statement. His remarks offered the most precise timeline the government has yet given for the disbursement of IMF loan tranches, money the government sorely needs to deal with an economic shock caused by the coronavirus pandemic.

“Today, with the president, we will have a phone call with Ms. Kristalina [Georgieva], the head of the IMF. The board meeting will be held on June 5, and probably June 6, Ukrainian time, we are planning to receive the tranche, ”he said.

The second tranche, worth $ 1.6 billion, is expected from September and the third tranche, worth $ 1.5 billion, will come next year, Shmygal said. Ukraine also expects to receive 600 million euros from the European Union shortly after the first tranche from the IMF.

STRONG ECONOMIC DECLINE

Shmygal also disclosed a preliminary estimate of economic growth in the second quarter of this year, saying gross domestic product could fall by 12%.

The government has previously said the economy will contract by almost 5% for the entire year.

The government expects the second quarter to be the hardest hit, and Shmygal said Ukraine could rebound with 3.6-4% growth next year.

Ukraine moved quickly to impose lockdown measures in March to contain the coronavirus pandemic. It has recorded fewer cases than most Western European countries, but many businesses have been closed or restricted.

The prime minister also said the government will not restrict wheat exports for the next two months, even if the quota the government previously agreed with traders has been used up.

Ukraine is one of the world’s largest grain exporters and had previously signaled that it may not allow exports beyond the quota. But Shmygal said the additional overseas sales were a vital source of foreign exchange and a way to support farmers.

The severe economic recession caused by the pandemic had also drawn attention to Ukraine’s ability to service its debt this year.

Shmygal said the government paid off a billion dollar Eurobond this week, which he said “shows that we can and are able to service the foreign and domestic debt in an absolutely calm manner. “.

“The support of our creditor partners is necessary for Ukraine for economic development,” he said.

Ukraine was able to repay the money without drawing on the central bank’s reserves, which stand at $ 26.2 billion, he said.

While Ukraine continues to borrow in the domestic market, “today, in the current situation, there is no urgent need to go to and borrow from foreign markets, firstly because the situation is unfavorable ”.