KIEV, Nov. 14 – Prime Minister Mykola Azarov said Monday that failure to resume borrowing from the International Monetary Fund has not caused any financial problems for Ukraine over the past 11 months.

He said the government has successfully managed foreign debt payments, and will continue to do so in 2012 even if the IMF continues to withhold the $15.5 billion loan.

“All foreign debt obligations are being honored, all social programs are being financed,” Azarov said in comments released by the government. “We lived through the year without problems, and will live through the next year.”

The comment comes less than two weeks after an IMF team suspended its mission and left Ukraine early after the government refused to hike domestic natural gas prices.

The government, which believes hiking gas prices now would cause social unrest, has refused to increase the prices and focused on talks with Russia seeking lower gas prices by the end of November.

The comment also shows that Azarov has not changed its cautious view on the resumption of borrowing from the IMF, which puts him in sharp contrast with other government officials, including Deputy Prime Minister Serhiy Tyhypko and National Bank of Ukraine Governor Serhiy Arbuzov.

Tyhypko and Arbuzov believe Ukraine needs to resume borrowing from the IMF immediately to prevent economic deterioration and even default.

Tyhypko said in June that the failure to resume the borrowing from the IMF would have catastrophic consequences, including the possibility of default.

The IMF suspended its $15 billion lending program for Ukraine since March delaying its installments after the government had refused to hike gas prices for households by 50% on April 1 and also postponed the pension reform that increases retirement age for women.

Tyhypko said the failure to resume the borrowing would increase the costs of commercial borrowing for both, the government and businesses, making it harder to repay their earlier debts.

Arbuzov, in a letter to Azarov earlier this year, said Ukraine may fail to receive an estimated $9 billion this year, including $6.2 billion from the IMF and $850 million from the World Bank, but added that final implications may be far greater, potentially leading to economic disaster.

The failure to resume cooperation with the IMF would “worsen Ukraine’s sovereign credit rating, increase foreign borrowing costs, reduce foreign direct investments, and increase demand for the hard currency,” Arbuzov said outlining the negative scenario. (tl/ez)