WASHINGTON: Ukraine, facing political deadlock and an economic crisis, secured a 16.5-billion-dollar loan from the International Monetary Fund on Sunday aimed at propping up its fragile banking system.

The IMF deal follows a similar 2.1-billion-dollar agreement with Iceland on Friday after the IMF announced it would make available more than 200 billion dollars in loans to countries facing difficulties due to the global financial crisis.

Belarus and Pakistan have also appealed for assistance from the IMF.

"An IMF staff mission and the Ukraine authorities have today reached agreement ... on an economic program supported by an SDR 11 billion (16.5 billion dollars) loan," Strauss-Kahn said in a statement.

He said the assistance would help shore up Ukraine's economy in concert with domestic government moves following the collapse of steel prices and problems in the banking sector.

"The authorities' programme is intended to support Ukraine's return to economic and financial stability, by addressing financial sector liquidity and solvency problems, by smoothing the adjustment to large external shocks and by reducing inflation," he said.

Strauss-Kahn, who on Sunday was cleared of harassment or favouritism following an affair with a colleague, said the funding would be contingent on approval by the body's executive board.

Ukraine's Finance Minstry welcomed the IMF's support, saying it "opened a door to Ukraine's speedy cooperation with other international financial organisations" and bolstered private investors' confidence in the country's banking sector.

The loan comes as President Viktor Yushchenko and Prime Minister Yulia Tymoshenko are locked in a fierce battle over the president's decision to call fresh elections.

Analysts have said their feud risks exacerbating the country's deep economic problems.

Ukraine stopped early withdrawals from savings accounts this month in a bid to halt a run on banks. The central bank has bailed out several banks and the Ukrainian stock market has lost more than 70 percent of its value this year.

Ukraine is getting less money from its main export, steel, because of a slump in global demand and is using up foreign currency reserves to support its currency, the hryvnia, analysts say.

These factors could lead to problems for the government to pay back some of the foreign loans that have helped boost Ukraine's economy in recent years as well as to make up for budget deficits.

"The IMF is moving expeditiously to help Ukraine, and this programme is focused on the essential upfront measures needed to maintain confidence and economic and financial stability," the IMF chief said in his statement.

He said the loan was "under an 24-month stand-by arrangement," adding that "consideration by the board would follow approval of legislative changes to Ukraine's bank resolution programme." - AFP/de