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UPDATE 1-IMF urges strong crisis management in Ukraine

Published 02/12/2009, 11:15 AM
Updated 02/12/2009, 11:16 AM

(Adds details, quotes from news conference)

WASHINGTON, Feb 12 (Reuters) - The International Monetary Fund said on Thursday talks with Ukraine were focused on containing the budget deficit in 2009 and stressed that strong crisis management was essential to stabilize the economy.

IMF spokesman David Hawley said different options were being considered on the fiscal side that will help the economy without undermining public finances. Talks were also focused on monetary policy and on restructuring the banking sector to restore confidence, he added.

An IMF mission failed to sign off on a first review of Ukraine's performances under a $16.4 billion IMF program during a recent visit, but noted some progress on fiscal, monetary and foreign exchange policies.

"Discussions between the authorities and fund staff on outstanding issues will continue in coming weeks and we expect the mission to return to Kiev to continue these discussions," Hawley told a regular news briefing. No date has been set for the staff mission.

Ukraine's Finance Minister Viktor Pynzenyk resigned on Thursday, saying he had become a "hostage to politics" in a dispute with the prime minister over the budget.

"It merely serves to underline the importance of strong crisis management being essential to the success of the the program," Hawley said.

Meanwhile, Ukraine has asked Russia about securing a $5 billion loan to cover its budget deficit.

Hawley said additional external financing to support the budget would temporarily alleviate immediate financing constraints.

"A higher deficit could then be considered which could help boost domestic demand and smooth the economic adjustment," he added. (Reporting by Lesley Wroughton; Editing by Tom Hals)

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