Ukraine eyes extra $21.5b

LONDON - Following fast on the declaration of additional help for Hungary, Ukraine has announced that it too will apply for fresh funding; a loan of US$14.9 billion ($21.5 billion) to help plug the country's budget deficit and boost investor confidence.

The IMF agreement commits Ukraine to slashing its budget deficit faster than planned - to 3.5 per cent of GDP next year.

Last year the IMF suspended Ukraine's US$16.4 billion rescue programme because the former administration of President Viktor Yushchenko, who was at odds with his government, reneged on promises of financial restraint.

Talks on a new stand-by facility have been prolonged as the IMF urged the government to set more ambitious fiscal tightening targets.

The new government of President Viktor Yanukovich adopted the 2010 budget with a deficit target of 5.3 per cent of GDP and said it would reduce the gap by one percentage point a year for the next five years.

Last year the budget deficit stood at 3.9 per cent of GDP but the government increased planned spending by a third this year to help the economy recover.

- INDEPENDENT