By Natsuko Waki
LONDON, May 15 (Reuters) - Ukraine needs European funds besides a $16.4 billion loan from the International Monetary Fund to help fight the economic crisis, a deputy prime minister said on Friday, slashing the country's growth forecast.
Hryhory Nemyria, deputy prime minister in charge with external relations, also criticised the European Union for helping out some non-EU eastern neighbours such as Serbia and not Ukraine, calling it a major contradiction.
Ukraine, one of the Eastern European countries hardest hit by the crisis, agreed on the International Monetary Fund loan programme last November. At the time the amount was far larger than most expected.
But rapidly falling demand for commodities, especially steel, has plunged the country deep into recession while a sinking currency, an over-dollarised economy and the credit crunch has destabilised the banking sector.
"We have the IMF, we have EBRD and World Bank but the EU is not on the horizon. That's a major contradiction and we are seeking answers for that," Nemyria told Reuters television on the sidelines of the European Bank for Reconstruction and Development's annual conference.
"There's no question Ukraine is a European country... Why is the EU so reluctant to use instruments that are available now for Latvia, Hungary, Romania, Serbia, for Ukraine? ... The IMF funds are not enough."
He said the EU could provide access to emergency funds which Hungary and Latvia used or European countries could provide bilateral funds.
Nemyria said the EU was being self-centred in ignoring Ukraine's pleas for help.
"It's not so much in terms of desperation, it's the logic of the naked self-interest from the European Union," Nemyria said.
He noted that banks from France, Italy, Sweden and Austria hold half of the Ukrainian banking sector.
"There's an inclination to think about helping Ukraine just because Ukraine needs this. But the EU needs this as well."
He also said he expected gross domestic product to fall by between 4 percent and 6 percent, against an official government forecast of +0.4 percent. The growth forecast had been criticised by analysts as unrealistic and has skewed the 2009 budget plan.
"As crisis management teaches us, we have to plan for the worst case scenario in order to be prepared for the worse," Nemyria said.
"We are not sticking to the 0.4 (percent forecast)... The situation is very fluid. It's going to be around minus four to six percent." (Editing by Stephen Nisbet)