FILE PHOTO: The International Monetary Fund logo is seen outside the headquarters building in Washington, U.S. September 4, 2018. REUTERS/Yuri Gripas/File Photo

By Olena Harmash and Dan Peleschuk

KYIV (Reuters) -The International Monetary Fund mission launched talks on Monday with Ukraine on a new lending programme critical to its wartime fortunes, as Kyiv grapples with a wide-ranging corruption probe that has shaken faith in the government.

Ukraine relies on the IMF and other foreign lenders to cover its budget gap as it funnels most revenues towards fending off Russian forces in the fourth year of Moscow's war.

Senior lawmaker Danylo Hetmantsev described Monday's talks as the most difficult since Russia's February 2022 invasion, following an investigation by anti-corruption authorities into an alleged scheme at the state nuclear agency involving around $100 million in kickbacks from contractors and money-laundering.

The probe has so far claimed two government ministers and prompted President Volodymyr Zelenskiy, whose former business associate is the chief suspect, to announce an overhaul of management in the energy sector.

The corruption scandal is the biggest in a series over the last few years. In September 2023 former defence minister Oleksii Reznikov quit after months of corruption allegations against his ministry, although he was never charged.

It also comes as Ukrainian troops struggle to beat back Russian forces from the strategic city of Pokrovsk, whose capture could allow Moscow to threaten eastern Ukraine's last key government-held cities.

SCANDAL LEADS TO LOSS OF TRUST

Hetmantsev, head of parliament's tax and finance committee, said a "loss of trust" among Kyiv's partners, who he said were openly talking about the scandal, had become "a big problem" for Ukraine.

"Trust is capital that is created over years, and can be lost in one unworthy moment," he wrote on the Telegram app.

Hetmantsev, who added Ukrainian officials would need to make "very difficult decisions", did not provide further details on the talks.

Priscilla Toffano, the IMF representative in Kyiv, had earlier said the talks would cover Ukraine's economic policy objectives and ways to strengthen governance, combat corruption and enhance growth.

Monday's discussions began as a special parliamentary commission publicly questioned government and law enforcement officials for details regarding the investigation and other corruption risks.

KYIV IS SEEKING NEW IMF PROGRAMME

Kyiv has requested a new IMF financing programme and hopes to secure a decision by the end of this year.

"The total amount of the programme that the IMF is offering Ukraine is about $8 billion over four years," said Roksolana Pidlasa, the head of the parliamentary budget committee.

"This is less than we expected and less than we need, but the IMF programme is key to obtaining financing from other partners, including a reparations loan.

She also said that passing the 2026 budget with a deficit, agreed with the lender, and increasing budget revenues by closing tax evasion schemes would be among the prior actions for the new program.

The previous programme, agreed in 2023, assumed the war would end in late 2025 - an unlikely prospect since a diplomatic effort stalled earlier this year.

Ukraine has so far received about $10.6 billion under its existing $15.6 billion Extended Fund Facility programme, according to the Finance Ministry.

(Additional reporting by Anastasiia Malenko; Editing by Hugh Lawson)