KIEV, June 21 – Ukraine would use financial resources from the International Monetary Fund to pay its foreign debts and to maintain stability of its local currency, Parliamentary Speaker Volodymyr Lytvyn said Monday.

Ukraine on Tuesday is expected to resume talks with the IMF over $19 billion 2.5-year loan package after the Washington-based lender has postponed the package last month.

“The problem is that the budget cannot do without the resources from the IMF,” Lytvyn said. “The problem is how to service debts and how to support the hryvnia.”

The comment echoes earlier concerns from Deputy Prime Minister Serhiy Tyhypko, who is in charge of the talks with the IMF, that Ukraine has no other option but to seek the resumption of the program.

The government planned to use at least $4.5 billion from the IMF to bridge budget deficit in June, but instead had resorted to borrowing $4 billion from Russian state-owned bank VTB.

The borrowing increases the level of foreign debt, making it even more difficult for the government to pay the debts when they come due.

“This year we have to pay at least 20 billion hryvnias ($2.5 billion) simply on interest payments,” Lytvyn said.

Ukraine resumes the talks with the IMF amid mounting concerns over its ability to keep up with the budget payments.

The talks with the IMF will focus on Ukraine’s budget deficit and will be “very difficult” as the government will seek to defend its budget deficit position, Tyhypko said.

Ukraine’s budget deficit is forecast at 5.3% of GDP in 2010, but together with financial gap at Naftogz Ukrayiny, the national gas company, the budget deficit is forecst at 6%.

But independent experts, such as Viktor Pynzenyk, a former finance minister, believe the real budget deficit will probably be at about 16% of GDP.

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)