KIEV, March 18 – Ukraine will seek to continue cooperation with the International Monetary Fund even after its $16.4 billion two-year Stand-by loan program is over in November 2010, Deputy Prime Minister Serhiy Tyhypko said Thursday.

Ukraine has been so far seeking to resume the cooperation and to receive the remaining $5.8 billion portion of the loan, but the disclosed plans indicate the government will need even more money.

“We have to think about the next program, the next step,” Tyhypko said at an investment conference. “Our [Stand-by] program will end in the fall, and I believe we must not end cooperation with the IMF.”

The IMF has so far disbursed $10.6 billion in three installments to Ukraine between November 2008 and November 2009, but suspended the lending after the government of former Prime Minister Yulia Tymoshenko had failed to approve reforms and austerity measures.

The Tymoshenko government ran a budget deficit of about 12% of the gross domestic product, while most of the borrowing from the IMF went to finance the budget deficit.

“I can tell you one thing – the Treasury is empty,” President Viktor Yanukovych said Thursday.

The IMF is expected to send a team to Ukraine next week for talks over resumption of lending to Ukraine, but Ukrainian officials already indicated that some of the demands will probably be not possible to implement.

Iryna Akimova, the chief economic advisor to Yanukovych, said the government will probably be unable to reduce budget deficit to 4% of the GDP in 2010as demanded by the IMF, and will instead target narrowing the budget deficit to 6-7% of the GDP.

Ukraine will need up to $4.5 billion to hold out until the IMF can resume the lending to the country, according to Oleksandr Savchenko, a former deputy finance minister.

Tyhypko said the upcoming talks with IMF will be difficult, but said the government is ready to confront the problems.

“Ukraine has lost trust. They spoke too much, but did so little,” Tyhypko said. “We will try to change the situation.”

Meanwhile, theplans to expand the cooperation – and borrowing – from the IMF comes in sharp contrast with the mood of at least one governing coalition partner: the Communist Party. Communists are the second largest group in the coalition.

Communist Party leader Petro Symonenko said Wednesday the plan to resume the cooperation with the IMF was the “wrong priority.” His comment underscored concerns over long-term stability of the Ukrainian government, which had been created earlier this month.

But Tyhypko again defended the plan.

“I perfectly understand the logic of the IMF, and I think it’s quite correct,” Tyhypko said. “The demands that they put forward are pragmatic, and they are needed not only for them as for a creditor, but they are needed for us. These are our problems.” (tl/ez)