President of Famous European Bank for Reconstruction and Development Thomas Mirow proclaimed the bank will provide support to Ukrainian banks only after the country receives collaboration with the International Monetary Fund.

It depends on whether there is a contract” between Ukraine and the International Monetary Fund, Mirow added in an interview in London late on these days. “We have readiness to provide more than 1 billion Euro into Ukrainian financial system and real economy if there is a contract with the IMF.”

Recently he said he is ready to provide about 600 million euros into 25 Ukrainian banks.

Ukraine, together with Romania, Hungary and other European countries, was pushed to search for a bailout after the global financial crisis stifled investment, shocked the bank system and sent the currency into a tailspin. The second installment of Ukraine’s $16 billion International monetary fund loan, expected last month, was delayed indefinitely after the government mentioned it’s targeting a budget deficit of 5 percent of gross domestic product, in breach of IMF conditions.

The two parties reached a mutual understanding on keeping the budget gap and are trying to “determine adjustments” that would be “the least harmful for the people,” IMF representative Max Alier told reporters in Kiev today after attending a government meeting. He refused to comment on when funds from the loan may start flowing again.

Deputy of Ukraine Hryhoriy Nemyrya reported the government had agreed at the meeting to cancel two contentious points in the 2009 state budget.

The price to struggle against defaults by Ukraine and Latvia rose to record highs today as the government looked to renegotiate terms of the International monetary fund bailout.

Credit-default swaps linked to our country jumped to 70 percent upfront and 6 percent a year, from 65 percent, a growth equivalent to more than 500 basis points, according to CMA Date Vision in London. That means it costs 6.5 million of USD in advance and 500 000 USD a year.

Ukraine’s economic contract this year will bring to an end nine years of growth and is exacerbated by a power fight between Prime Minister Yulia Timoshenko and President of Ukraine Viktor Yushchenko. The economy may shrink 15 percent this year, Standard & Poor’s credit analyst Frank Gill said on March 6.

The World Bank, the EBRD and the European Investment Bank acclaimed on February 27 they will invest as much as 25 billion Euro to help central and eastern European banks and business struggle with the crisis. The EBRD will invest about 6 billion Euro, the EIB about 10 billion Euro and the World Bank about 7.5 billion Euro.

Prime Minister of Hungary Ferenc Gyurcsany reported on March 3 he wants the EBRD to change its charter, enabling it to lend and invest as much as three times its 20 billion euros of share capital.