Page last updated at 16:35 GMT, Friday, 11 December 2009

Ukraine wants $2bn loan from IMF

Ukrainian President Viktor Yushchenko and Prime Minister Yulia Tymoshenko
Ukraine's political leadership is fractured and so is its economy

Ukraine has made an urgent appeal to the International Monetary Fund for about $2bn in emergency loans.

It says it needs the money to meet external obligations and avoid the danger of a "spill-over effect" on other economically vulnerable states.

"The next three months are crucial," said Hryhoriy Nemyria, Ukraine's deputy prime minister, who has just returned from a mission to IMF headquarters.

The country has received $11bn of a $16.4bn IMF loan.

The rest of the money was suspended by the IMF after it said Ukraine needed to implement economic reforms before it would hand over any more.

Ukraine says it desperately needs the money. It has hinted that if it does not get extra funds soon, the consequences could be serious.

At risk could be its ability to pay salaries, foreign debt and, crucially for its neighbours, its gas bill - notoriously supplied by Gazprom.

Troubled economy

Mr Nemyria told the Financial Times newspaper: "Wait and see is not an option. The cost of inaction is greater than the cost of action and may aggravate the situation in the wider region."

Mr Nemyria declined to say whether Ukraine would be forced into default without immediate fresh IMF support. But he said it would be "extremely difficult" for the government to pay state salaries and pensions or to cover foreign obligations, including, crucially, monthly payments to Russia.

Ukraine is Europe's most troubled large economy. Its economy shrank by 15% this year.

Kiev's political leaders are divided, with President Viktor Yushchenko, Prime Minister Yulia Tymoshenko and ex-Prime Minister Viktor Yanukovych all campaigning for a presidential election to be held next month.

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