KIEV, Jan. 26 – Ukraine’s desperate attempts to win resumption of a $15.5 billion loan from the International Monetary Fund ended in fiasco Thursday with the lender twice refusing to do so over the past three days.

The government has been seeking to win the loan without hiking natural gas prices for households - the key demand from the IMF - amid fears the unpopular measure would hurt the ruling party at upcoming elections in October.

The developments left the government struggling to find a financial solution that would compensate national energy company Naftogaz Ukrayiny for selling expensive imported gas domestically below market.

But the talks highlight a major effort to win the IMF loan despite previous assurances from senior officials that the government has enough money in its coffers this year.

Ukraine, which is facing mounting foreign debt payments this year, is due to pay $3.8 billion to the IMF only in 2012, of which $600 million will have to be paid as soon as in February.

A government team, led by First Deputy Prime Minister Andriy Kliuyev, left for Washington late Monday, but had quietly returned to Kiev Wednesday without making any progress.

This failure forced Prime Minister Mykola Azarov to change his plans on Thursday and to fly to Zurich for a brief meeting with IMF Managing Director Christine Lagarde.

The meeting, however, has also failed to produce any concrete results.

“The parties have agreed to continue the dialog,” the Cabinet of Minister reported in a statement after the Azarov-Lagarde meeting.

Serhiy Tyhypko, deputy prime minister and a member of the team for the talks in Washington, said Thursday the issue of gas prices remains to be the most problematic that requires a solution.

“Hiking gas prices is practically the only issue that we have to do in line with our memorandum,” Tyhypko said at a press conference. “But I can say clearly that there will be no gas price hike in Ukraine.”

The failure in the talks in Washington is also a personal setback for the recently appointed Finance Minister Valeriy Khoroshkovskiy.

His appointment last week to replace Fedir Yaroshenko was aimed at reinvigorating the talks with the IMF. Before his trip to Washington, Khoroshkovskiy said: “The task is to resume the program, to get the loan.”

Khoroshkovskiy and other government officials said that hiking gas prices by 50% would only increase arrears in the energy sector.

But perhaps even more important argument is that the unpopular measure may eliminate the ruling Regions Party at upcoming parliamentary elections in October.

“Our clear position is that we won’t do this until after the election,” Tyhypko said. “There will be no price hike, there must be no utility price hike this year.” (tl/ez)