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Russia will "wait" on Ukraine loan until new government decided

President Vladimir Putin on Wednesday said Russia would wait until a new government is formed in Ukraine before it considers releasing a crucial US$15 billion bailout package for Kiev in full.

MOSCOW: President Vladimir Putin on Wednesday said Russia would wait until a new government is formed in Ukraine before it considers releasing a crucial US$15 billion bailout package for Kiev in full.

The Russian president's comments indicated that Moscow may renege on its promise to bail out the crisis-hit Ukraine if the new government turns out to be staunchly anti-Russian.

"Let's wait until a new government is formed in Ukraine," Putin said in televised remarks to his cabinet.

"But I ask you not to lose contact with your colleagues even in the current situation."

Ukrainian Prime Minister Mykola Azarov and his entire government resigned on Tuesday after weeks of protests that began when President Viktor Yanukovych pulled out of a key EU deal in favour of closer ties with Moscow.

In a bid to prop up embattled Yanukovych, Russia agreed in December to buy US$15 billion (11 billion euros) of its debt and slash its gas bill by a third.

The bailout was seen as a move to reward the struggling ex-Soviet country for ditching the EU pact. Russia has already disbursed an initial US$3 billion.

Putin's announcement came after senior members of his cabinet urged him to wait to see the makeup of Ukraine's new cabinet before honouring December's agreement in full.

"Understanding the necessity of fulfilling all the agreements, we have to do it in a reasonable manner," said Prime Minister Dmitry Medvedev.

"And it will be possible to do it in a reasonable manner only when we understand what the government will look like, who will work there and what rules they will stick to," he said at the meeting with Putin.

On Tuesday, Putin promised after talks with top EU officials that Russia "will not" review the loan agreement, regardless of whether Ukraine's opposition comes to power.

Ratings agency Standard and Poor's on Tuesday downgraded Ukraine's sovereign rating from B- to CCC+, citing political instability.

The agency said that the Russian financing, which amounts to about 8.0 per cent of Ukraine's 2014 GDP, "could be put at risk" if Yanukovych lost power and if ties with Russia deteriorated further.

Chris Weafer, senior partner at consulting firm Macro Advisory, said Russia's bailout package implied that Ukraine would strengthen ties with the Kremlin.

"If there is a change of government which then orientates the country towards the EU, I would expect Russia to change the terms of the deal or to back out," he said in emailed comments.

"So, if the opposition does eventually win and adopts a pro-EU stance in government, then Brussels will be expected to fast-track EU entry and to write a large cheque to compensate for the loss of the Russia deal."

World boxing champion and top Ukrainian protest leader Vitali Klitschko said on Wednesday that the pro-EU opposition wanted good relations with Moscow.

"Russia is our neighbour, and we want to have good ties with all of our neighbours," he said in Kiev.

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