KIEV, June 19 – Ukraine doesn’t have any other option but to resume cooperation – and borrowing – from the International Monetary Fund, Deputy Prime Minister Serhiy Tyhypko said Friday.

An IMF team is expected to arrive in Ukraine and begin talks with the government on Tuesday over possible resumption of its $19 billion 2.5-year lending program amid mounting concerns over a widening budget deficit.

“We don’t have any other options,” Tyhypko told BBC Ukrainian service. “We have to have an agreement with the IMF.”

The comment is a change of tone after Tyhypko had suggested on June 7 that “nothing dramatic will happen” if Ukraine fails to reach the agreement with the IMF. In this case, Tyhypko then suggested, Ukraine would simply borrow money from Russia and from capital markets.

There were signs that the government has been struggling in keeping up with its budget deficit after recent reports that Ukraine had resorted to emergency borrowing from Russia earlier this month.

Ukraine borrowed $4 billion in two different loans from Russian state-owned commercial bank VTB earlier in June, including $2 billion to bridge budget deficit and $2 billion to finance nuclear power reactors.

None of Ukraine’s government officials have explained details of the emergency borrowing from Russia, raising concerns that there could have been political conditions for the loan.

When pressed by reporters to provide the details, Prime Minister Mykola Azarov last week said he will disclose the information later.

The talks with the IMF will focus on Ukraine’s budget deficit and will be “difficult,” Tyhypko said.

“Now we have very difficult talks ahead of us to confirm our budget deficit at 6% of GDP together with the financial gap of Naftogaz Ukrayiny,” Tyhypko said.

Viktor Pynzenyk, a former finance minister, said the IMF will probably postpone the lending because of huge hidden budget deficit incorporated in the 2010 budget.

He estimated the real budget deficit at 16% of the GDP, not 5.3% as the government had predicted.

The government plans to spend the money to finance budget deficit and to support foreign exchange reserves of the National Bank of Ukraine.

Ukraine’s economy was growing at a pace of 6.1% on the year in the first five months, compared with 15% contraction recorded in 2009.

President Viktor Yanukovych two weeks ago told Dominique Strauss-Kahn, the managing director of the International Monetary Fund, that Ukraine was about to launch economic reforms, and asked for the lending to be disbursed.

Max Alier, IMF resident representative in Ukraine, said the reform package was not “ambitious enough” to address the “existing problems.” (tl/ez)