KIEV, March 12 – Fedir Yaroshenko, the newly appointed finance minister, said the state of Ukraine’s finances was “catastrophic,” but he has ruled out default, saying the government will resume work with international financial organizations.

Asked if there was a threat of default, Yaroshenko said on Friday: “No. I assure you, no.”

But he admitted that the state of the country’s finances was “catastrophic” as the previous government, led by former Prime Minister Yulia Tymoshenko, had run a huge hidden budget deficit.

“The [Tymoshenko] government was concealing the fact that the state of finances was on the verge of the catastrophe,” Yaroshenko said at a press conference.

Yaroshenko, who was appointed on Thursday, cited a recent secret memo from Tetiana Sliuz, the head of Treasury, to the finance ministry, indicating there was not enough money to pay social security.

“The leftover cash [on the Treasury’s account] was minus 1.4 billion hryvnias,” Yaroshenko said, citing the memo.

Viktor Pynzenyk, a former finance minister who quit the Tymoshenko government in February 2009, had recently estimated the budget deficit at about 100 billion hryvnias in 2009, three times the original forecast.

Yaroshenko said only the state-run Pension Fund, which pays social security to all retirees in Ukraine, has been running a deficit of 25 billion hryvnias.

“The giant budget deficit, the state debt rising at a crazy pace, total collapse of state tax collection and administration – this is the result of work by the previous government,” Yaroshenko said.

The Tymoshenko government, which lacked the support of the majority in Parliament, had failed to approve the 2010 budget in December 2009. That was one of the reasons that had forced the International Monetary Fund to suspend its $16.4 billion loan.

Prime Minister Mykola Azarov on Thursday instructed the finance ministry to come up with the 2010 budget draft by April 11 for approval by Parliament.

“We are working to resume cooperation with all international financial organizations,” Yaroshenko said. “I want to stress that the finance ministry will make sure that all spending is made to the full extent.”

“For Ukraine it’s much more important to continue the cooperation with the IMF,” Serhiy Tyhypko, the deputy prime minister for economy, said at a press conference Friday. “The World Bank and the IMF – this is where the biggest investments will come from.” (tl/ez)