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KIEV - Ukraine on Friday appealed to the International Monetary Fund for a loan of around two billion dollars to overcome an "extremely difficult" financial situation, government officials said.
The cash would be half of the next tranche of Ukraine's 16.4-billion-dollar standby credit from the IMF that was agreed last year, Natalya Lysova, spokeswoman for Deputy Prime Minister Grigory Nemyria, told AFP.
"It amounts to around 2 billion dollars," she said.
Lysova confirmed comments made by Nemyria to the Financial Times published Friday afternoon describing Ukraine's current financial situation as "extremely difficult," without giving further details.
The newspaper said Nemyria was referring to the government's ability to pay state salaries, pensions, foreign obligations and monthly payments to Russia for gas supplies.
Concerns about the stability of the Ukrainian economy have grown over the last weeks after the financial problems of Dubai and Greece rattled global markets.
Ukraine has been harder hit by the economic crisis that any other major European economy after the global slowdown triggered a massive slump in its export-dependent heavy industrial sector.
Its failure to pay Russian gas bills triggered Europe's worst gas crisis of modern times in the New Year when a dozen European countries were deprived of Russian gas transiting Ukraine amid a bitterly cold winter.
The IMF loan -- by far Ukraine's biggest source of foreign income in 2009 -- is crucial to help the country overcome the crisis but the fund has been exasperated by political infighting and new laws on wages and pensions.
The release of the next tranche of 3.8 billion dollars from the standby credit, originally due in November, had been put off due to the fund's concerns amid intense campaigning for presidential elections on January 17.
"The next three months are crucial," Nemyria told the Financial Times one day after returning from a mission to the IMF's headquarters in Washington.
"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."
"It would be a fatal mistake if we recreate the risk of destabilising the situation," he said.
"The IMF money is very important for Ukraine as it is the key to obtaining other financial resources" that the country needs, said Igor Burakovsky director of the Institute for Economic Research.
"I do not think Ukraine will die without this tranche. I do not envisage apocalyptic scenarios," he said. "But a refusal by the IMF would aggravate the financial position which is already very complicated."
Olena Belan, economist at Dragon Capital, estimated that most of the payments for Ukraine's external debt obligations were due in the second half of 2010.
Standard and Poor's maintains a 'CCC+/C' long- and short-term foreign currency sovereign credit ratings on Ukraine, a mark that means the debtor is vulnerable to defaulting on its debt.
Ukraine's heavily-indebted state gas company Naftogaz in October defaulted on a 500 million dollar eurobond but restructured the debt with creditors.
- AFP /ls
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