Ukraine PM risks losing IMF credit says president's aide

By Ron Popeski

KIEV (Reuters) - An aide to Ukraine's president accused Prime Minister Yulia Tymoshenko on Monday of putting a big IMF credit at risk by linking quick approval of financial legislation with the country's long-running political upheaval.

The International Monetary Fund and Ukraine agreed on Sunday on a $16.5 billion (10.6 billion pounds) credit for the ex-Soviet state, subject to approval of financial measures by the fractious parliament, which was blockaded last week by the prime minister's allies.

Tymoshenko and her supporters last week blocked discussion of the financial package for four days in order to prevent inclusion in it of any funding for disputed early elections, called by Yushchenko for next month.

Markets were unimpressed by news of the credit. The hryvnia currency sank to a record low, prompting the central bank to abandon a corridor to control its movements.

The tiny stock market plunged a further four percent and credit default swaps, an indication of risk that Ukraine could default on debts, rose to 2,600 basis points from 300 in August.

Ratings agency Fitch said further tumbles in the currency could put Ukraine's rating under pressure, but acknowledged that the IMF accord could help restore confidence.

Parliamentary approval of financial legislation is critical to the deal. The chamber is due to consider the legislation on Tuesday after a weekend of talks to produce a compromise package to ease the effects of the world financial crisis.

But Ukraine also remains gripped by political turbulence sparked by President Viktor Yushchenko's dissolution of parliament and call for a new election.