KIEV, Oct. 5 – The government scrambled on Monday to persuade the International Monetary Fund to continue lending to Ukraine, arguing that its $16.4 billion loan was “extremely important” for the country.

Deputy Prime Minister Hryhoriy Nemyria met IMF deputy managing director John Lipski in Istanbul on Monday to emphasize the importance of the continued lending, and pledged to continue economic reforms.

“The deputy prime minister stressed that further successful cooperation with the IMF is extremely important for Ukraine,” the government said in a statement.

Nemyria assured Lipski the government will “do its best” to implement the reforms that had been earlier agreed between Ukraine and the IMF as part of the $16.4 billion lending package.

The meeting and the assurances come amid mounting concerns that the IMF may postpone its $3.1 billion next installment because the government of Prime Minister Yulia Tymoshenko had failed to implement critical reforms.

For example, the government failed to hike domestic natural gas prices by 20% from September 1 as it had originally promised.

But Tymoshenko said Saturday the gas prices will stay unchanged through the end of the year, which analysts said was an attempt to improve her popularity ahead of the presidential election vote in January 2010.

The refusal to hike the prices places a major burden on Naftogaz Ukrayiny, the national oil and gas company, which has been already struggling with making timely monthly payments for gas imports from Russia.

Nemyria traveled to Istanbul as the leader of a government team attending an annual IMF-World Bank meeting that is currently talking place in Turkey, the government said.

An IMF team is expected to arrive in Ukraine later this month to check whether the government has adhered to the agreed reforms. This is the second attempt by the IMF to assess the pace of reforms after the team had last month found little progress done by the country.

The government hopes to receive $3.1 billion installment from the IMF before the end of the year in order to be able to meet the country’s foreign debt obligations and to support the national currency.

But Oleksandr Shlapak, a deputy chief of staff at the office of President Viktor Yushchenko, said the IMF may postpone the lending because the government has failed to implement the reforms.

Yushchenko last month accused Tymoshenko, his political rival ahead of the next vote, for failing to implement five out of six key reforms that had been earlier agreed with the IMF.

The government depends on external borrowing to be able to pay foreign debts this year and next as Ukraine goes through the sharpest economic crisis since the collapse of the former Soviet Union in 1991.

Dominique Strauss-Kahn, the managing director of the International Monetary Fund, said last week that Ukraine must press ahead with the reforms as loans alone will not help the economy out of the crisis. (tl/ez)