• Government agrees to unify household, industrial tariffs
  • U.S. calls for court reforms, crackdown on corrupt officials

Ukraine’s new government overhauled household heating prices to help restart a $17.5 billion loan from the International Monetary Fund as the U.S., another major donor, told the ex-Soviet republic it must start prosecuting corrupt officials.

A cabinet meeting Wednesday in Kiev approved a new natural gas tariff to strengthen the budget, as sought by the IMF. While the U.S. said it was encouraged by reform efforts to date, Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland warned that graft must be tackled and the continued flow of financial aid will depend on progress.

“Ukraine needs a new prosecutor general, real, deep judicial reform,” Nuland told reporters after meeting President Petro Poroshenko and new Prime Minister Volodymyr Hroisman. “Obviously corruption is a very deep problem. It’s time to start locking up people who’ve ripped off the Ukrainian population for too long, and to eradicate the cancer of corruption."

Ukraine’s leaders are struggling to prove their reform credentials to voters and foreign donors disappointed by anti-corruption efforts since a revolution toppled the nation’s Russian-backed president in 2014. Hroisman took charge in a cabinet shakeup this month after officials brought in to modernize the post-communist economy quit and the IMF froze the bailout.

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Government bonds and the hryvnia have since rallied, with new Finance Minister Oleksandr Danylyuk saying the next $1.7 billion tranche of the delayed International Monetary Fund rescue could arrive as early as May. That could pave the way to unlock a similar total of $3.4 billion in aid, including a $1 billion loan guarantee from the U.S., he said this month in an interview.

The new gas tariff eliminates separate winter and summer prices for households, and unifies what they pay with the cost for industrial customers. It will be set at 6,879 hryvnia ($273) per 1,000 cubic meters starting May 1.

The IMF had originally wanted Ukraine to raise the costs for households this month. Removing the differential between them and industrial energy prices will reduce the scope for corruption, First Deputy Prime Minister Stepan Kubiv, who’s also economy minister, told the government meeting.

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