Ukraine's Yaresko not part of new coalition government

Finance Minister Natalia Yaresko will not remain in a new Ukrainian cabinet led by presidential ally Volodymyr Groysman and former investment manager Oleksandr Danylyuk is likely to succeed her, lawmakers said on Tuesday.

Legislators are in the final stages of agreeing a new coalition to end a political deadlock that has stalled billions of dollars in foreign loans, but it has not been clear who would take up key posts following the resignation of Prime Minister Arseny Yatseniuk on Sunday.

The finance minister post is especially sensitive given cash-strapped Ukraine's strategic dealings with the International Monetary Fund and other Western backers.

"Now Yaresko's not mentioned anywhere. She's not in the picture," lawmaker Serhiy Leshchenko told Reuters. Fellow deputy Leonid Kozachenko echoed this view.

Kozachenko, Leshchenko and lawmaker Mustafa Nayyem all said Danylyuk has been chosen to take over from Yaresko if Groysman's nomination for prime minister is approved.

Danylyuk, 40, is the deputy head of President Petro Poroshenko's administration. His nomination could boost concerns among reformists that the reshuffle under Groysman will consolidate power in the hands of the president and his circle.

Yaresko's representatives in the finance ministry have repeatedly declined to comment when asked if she would remain in a Groysman-led cabinet.

The departure of the US-born technocrat could be a disappointment for some of Ukraine's Western allies, who have praised her handling of the country's finances amid economic meltdown and a separatist conflict.

Nevertheless, the formation of stable government could pave the way for the disbursement of a third tranche of IMF loans worth $1.7 billion, which has been delayed since October due to the political deadlock.

Vice-speaker of parliament Andriy Parubiy said four independent deputies had joined Poroshenko's BPP faction, which means BPP and the People's Front party have enough members to form a coalition with a slender majority.

It was not clear when this would formally be announced, but several lawmakers said this could happen during the late session of parliament on Tuesday.