Kiev - Ukraine's parliament must approve a 16.5-billion- dollar assistance package from the International Monetary Fund (IMF), or the former Soviet republic will face default, the country's national bank head said Tuesday.

Volodymyr Stelmakh, chairman of the National Bank of Ukraine (NBU), said Kiev desperately needs the low-cost loan, as without it the NBU "almost certainly" would be unable to honour Ukraine's foreign debts.

Stelmakh's statement, made at a Kiev press conference, was Ukraine's clearest warning yet that the world financial crisis had left the country short of cash and on the edge of default on bonds sold in international markets.

Ukrainian President Viktor Yushchenko spoke indirectly of his government's desperate need for outside financing situation only last week, saying without the IMF Ukraine "could face difficulties on foreign debt."

The IMF on Sunday announced it would provide Ukraine the money, without naming the terms.

Volodymyr Tomenko, a pro-Europe MP, told Korrespondent magazine the fund would loan the cash at a 4 per cent annual rate over 15 years.

The IMF credit terms would be hugely profitable for Ukrainian financial houses able to access the cash, as interest rates in the country currently are hovering at 22 to 28 per cent a year.

Reduction of the national budget deficit, a tightening of bank regulations particularly reserve requirements, release of the national currency the hryna into a free float, and anti-inflation legislation are among the conditions set by the IMF, for Kiev to receive the cash.

Most of the measures are likely to slow growth or cause unemployment in Ukraine's already-battered economy, and are traditionally opposed by a strong majority of the parliament.

Ukraine's parliament by constitutional statute must approve any new foreign debt taken on by the government.

But mounting pressure on MPs to take action to shore up Ukraine's tottering financial, banking, construction, and heavy industrial sectors makes ultimate acceptance of the IMF terms by parliament probable in the long term, observers said.

The legislature recently however has been stalled since early October, when Yushchenko called for new elections, only to convene the legislature a few days later to deal with a ballooning financial crisis.

MPs attempted all of last week to consider legislation aimed at controlling the crisis, but failed even to debate the financial bills because of an impasse between political parties on when the new elections should take place, and on what terms.

The global financial crisis has savaged Ukraine's once-booming economy, reducing the value of the national currency by some 25 per cent, and the national stock market by some 45 per cent, over October. (dpa)