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KIEV, Dec 14 (Reuters) - Ukraine's central bank extended on Wednesday currency controls including the mandatory sale of 65 percent of foreign currency revenue by exporters, citing increased political instability and delayed loans from the International Monetary Fund.
The controls were introduced in 2014 to support the hryvnia currency, which had halved in value in the wake of political upheaval and the outbreak of separatist fighting. The bank eased some restrictions in June, but the majority remain in force as of the latest review.
"Uncertainty has risen due to increased political tension. Secondly, the likelihood has grown of delays to receiving official financing due to the slow implementation of measures under the Ukraine's IMF programme," the bank said in a statement, explaining its decision to extend controls.
Squabbles in parliament have delayed the approval of a budget for 2017. This has held up the disbursement of a further $1.3 billion from the Fund, causing foreign reserves to fall below the central bank's target for the end of the year.
The central bank said there were also short-term systemic risks to financial stability due to the possibility that individual banks might fail a recapitalisation programme.
Reforming the banking sector, including by recapitalising lenders and reducing their loans to shareholders, was one of the tasks mandated by the $17.5 billion IMF programme.
Privatbank, Ukraine's largest lender, has been in particular focus, because with $6 billion in private deposits - 36.5 percent of Ukraine's total - it is considered too big to fail.
The central bank said it would review its restriction on the mandatory sale of foreign income within six months, but did not say when other controls would be reviewed.
The other restrictions include limits on currency withdrawals and purchases and curbs on the repatriation of foreign dividends. (Reporting by Natalia Zinets; Writing by Alessanda Prentice; Editing by Hugh Lawson)