KIEV, Oct. 15 – President Viktor Yushchenko said today he will unveil his plan to rescue Ukraine’s battered financial system from the mounting liquidity crunch on Friday, adding the plan would involve coordinated actions by the government and the central bank.

Yushchenko will call a meeting of the National Security and Defense Council, the country’s top security body, on Friday to address the financial crisis, a sign the matter has become the major concern.

“Sooner or later we have to formulate a single plan that would form confidence,” Yushchenko said in Zaporizhia. “Our task is to engage key national institutions, which are supposed to deal with such challenges, to the formation of the plan.”

Yushchenko has recently been dealing with Ukraine’s worst financial crisis since November 2004, when the National Bank of Ukraine had to spend billions of dollars to support the hryvnia amid confidence crisis.

Prime Minister Yulia Tymoshenko had sought to distance herself from the crisis. She said Tuesday that mostly the NBU and the security council - not the government - must deal with the problem.

The hryvnia has been facing mounting downward pressure amid massive run on deposits, forcing the NBU to take bold steps to try to restore confidence in the banking sector.

The NBU widened steeply currency trading band for the hryvnia, began massive hard currency interventions to support the hryvnia and banned commercial banks for releasing cash to people and businesses before deposit agreements expire.

Tymoshenko blamed the escalating world financial crisis for the problems that Ukraine is currently facing, but Yushchenko said the government, due its rampant social spending policy, was mostly responsible.

“Two thirds of the crisis was caused by domestic issues, in particular by populist and poorly thought out budget policy,” Yushchenko said. “The adequacy of the spending to GDP has been violated.”

Ukraine’s inflation rose to the highest level in Europe earlier this year after Tymoshenko had started to implement her campaign promises of redeeming 20 billion hryvnia worth of failed Soviet era bank deposits this year.

To stem consumer price increases, Tymoshenko pushed for the steep appreciation of the hryvnia in May, a controversial move that had discouraged exports and encouraged imports, widening foreign trade deficit dramatically.

But in early October the hryvnia lost its value steeply, plunging beyond the level the NBU had earlier pledged to defend, reacting to the increased demand for hard currency and causing a major shock.

The NBU is thought to have already spent more than $1 billion from its forex reserves over the past two weeks to support the hryvnia, analysts said. The NBU now controls about $36.5 billion in reserves.

As the NBU has been scrambling to contain the crisis, the government has been slow to react with any coordinated actions. But Yushchenko, himself a former governor of the central bank, said the coordinated actions is the key to success.

“The problem No. 1 is that the government and financial authorities must speak in one voice,” Yushchenko said. (tl/ez)