Ukraine's government has asked Russia about securing a $5 billion loan to help cover its budget deficit, Russia's Finance Ministry said Monday, drawing immediate criticism from Ukrainian President Viktor Yushchenko.

The ministry acknowledged the request from Kiev after Ukrainian Prime Minister Yulia Tymoshenko said over the weekend that her government was engaged in talks to secure credits from various sources. She told reporters that she had received positive replies from several countries, including Russia.

Analysts were skeptical, saying a deal with Moscow could jeopardize a loan accord with the International Monetary Fund.

"Last week, bilateral consultations took place at the Russia Finance Ministry with the representatives of the Ukrainian Finance Ministry, at their request," the Russian Finance Ministry said in a statement.

"The Ukrainian side expressed a request to evaluate the possibility of Russia giving a loan of $5 billion."

The ministry said it wanted more information about the economic situation in Ukraine. No official request had yet been received from Kiev, it added.

Yushchenko denounced the notion of new loans to cover a deficit set at 3 percent of gross domestic product despite an IMF requirement to eliminate all deficits.

"I know of no market that would finance this. Which door are we to knock on for financing?" he said, Interfax reported. "This is a policy of theft."

In Kiev, a senior central bank official said the first task of authorities had to be reducing budget expenditure.

"Without a revision of the budget, any long-term agreement with the IMF is in doubt, even if we mobilize all our resources of foreign borrowing," said Valery Lytvytsky, top adviser to the Central Bank.

Source >  The Moscow Times | Feb 10

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