KYIV- Ukraine has discussed with the International Monetary Fund a plan to issue green bonds to repay debts to renewable energy producers, Prime Minister Denys Shmygal said on Wednesday.

"We will be able to continue paying off debts to renewable energy producers with the help of this tool," Shmygal told a televised government meeting, without giving further details.

Ukraine is currently in talks with the IMF mission to unlock loans under a $5 billion programme.

Ukraine set up special tariffs for renewable energy companies in 2009 to expand green power production and pledged to buy all the energy produced.

But these high tariffs have become a burden for the state and created a problem of mass non-payment in the country, whose economy plunged into recession amid the coronavirus pandemic in 2020.

Last July parliament passed a law significantly reducing the prices for solar and wind energy. It made the payment burden more manageable but the government has still not repaid older debts that amount to about 23 billion hryvnias ($814 million).

It is struggling to repay the debts to producers, many of whom are foreign companies.

The IMF supports Ukraine's reforms to transform its Soviet-style subsidized energy sector. ($1 = 28.2492 hryvnias)

(Reporting by Natalia Zinets Editing by Matthias Williams and Mark Heinrich) ((Natasha.Zinets1@thomsonreuters.com;))