Ukraine's parliament extends ban on agricultural land sales

KIEV (Reuters) - The Ukrainian parliament voted on Thursday to extend a ban on the sale of agricultural land by one year, delaying what financial backers say is a key reform essential to Ukraine's long-term economic growth.

The bill was backed by 236 lawmakers, narrowly over the 226 required to pass.

Currently Ukraine's more than 40 million hectares (99 million acres) of farmland cannot be bought or sold. The land is instead divided into smaller plots that are leased, resulting in relatively low productivity and limited private and foreign investment.

The International Monetary Fund says the moratorium hampers the development of the agricultural sector and named land reform as a key condition for future funding under its $17.5 billion loan program.

But the issue is politically sensitive in Ukraine - once the bread basket of the Soviet Union, and some politicians say lifting the moratorium could lead to a land-grab by powerful businessmen or foreign conglomerates.

"Today 60 percent of Ukrainian live below the poverty line. Who will buy this land? Only oligarchs," Svoboda party MP Yuriy Levchenko said before the vote.

(Reporting by Pavel Polityuk and Natalia Zinets; Writing by Alessandra Prentice; editing by Matthias Williams and Elaine Hardcastle)

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