Ukraine says may turn to Russia if IMF talks fail

* Deputy PM says govt has other funding options

* But IMF involvement still preferred

KIEV, June 8 (BestGrowthStock) – Ukraine may seek bilateral loans
from Russia and other countries if the International Monetary
Fund turns down its $19 billion loan request, Deputy Prime
Minister Sergey Tigipko said.

In a first sign that the new government is unsure about the
outcome of prolonged IMF talks focusing on the need for painful
reforms, Tigipko said in a television talk show late on Monday
that the crisis-hit, former Soviet republic had other options.

“I am sure we will have an IMF programme,” Tigipko told a
show hosted by the local ICTV channel. “(But) we can
theoretically discuss a case where there would be no IMF loan
and nothing dramatic would happen.

“Ukraine would need to make relevant decisions and going for
bilateral relations and bilateral loans, including with Russia,
may be an option.”

Tigipko said the government could also borrow from the
domestic and international capital markets but it still regarded
IMF funding as preferable.

The IMF wants Ukraine to cut its budget deficit drastically
through unpopular measures such as raising utility tariffs —
something newly-elected President Viktor Yanukovich may be
hesitant to do.

An IMF mission was to visit Kiev on Wednesday to discuss
economic policies that could be supported by its loan.

The Fund last year suspended Ukraine’s $16.4 billion rescue
programme because the previous government reneged on promises of
financial restraint.

The programme was also disrupted by politicians jostling for
advantage in the run-up to elections, derailing cooperation with
the IMF. Yanukovich, who enjoys strong Russian backing, was
elected to power in February.

Analysts say Russian financial aid may come with political
covenants.

In April, Yanukovich struck a deal with Moscow to lower
prices for Russian gas by 30 percent in exchange for letting
Russia’s navy stay in Ukraine’s Sevastopol port until 2042.

Investment
(Writing by Olzhas Auyezov; Editing by Richard Balmforth and
Mark Heinrich)

Ukraine says may turn to Russia if IMF talks fail