Ukraine`s government and the International Monetary Fund were locked in talks on Thursday to agree on a package of remedies to to cushion Ukraine`s economy from the world financial crisis, Reuters reported.

Finance Minister Viktor Pynzenyk had met the IMF expert mission on Thursday and the two sides "discussed the situation concerning the world financial crises and the challenges facing UKraine`s financial system."

The statement added both sides agreed to produce "recommendations for Ukraine vital for the operation of the banking sector and macroeconomic stability for Ukraine, based on the experts` assessment and taking account of the experience of other European countries".

The IMF delegation arrived on Wednesday, which has joined Iceland, Hungary and Serbia in approaching the Fund for help. A central bank official said on Wednesday discussions could focus on making a standby credit facility available to Ukraine.

Ukraine is long used to political upheaval since the 2004 "Orange" Revolution brought a pro-Western governing team to power and has avoided sharp blows from the financial crisis. But analysts have expressed concern about the weakness of the hryvnia currency and the stability of the banking sector.

Prime Minister Yulia Tymoshenko, addressing a cabinet meeting, pronounced the country`s banking system sound.

"I have said clearly that the government, the central bank and all state institutions are acting in a correct, logical and consistent way," she told ministers. "There are no serious signs of the world financial crisis in Ukraine in any way now."

The IMF`s Kiev office made no comment on the mission, expected to remain in Ukraine for at least a week. Estimates of what the IMF may give to Ukraine vary widely from $3-15 billion. Most analysts have refrained from citing any particular figure.

Financial worries are compounded by the latest bout of political turmoil, with President Viktor Yushchenko dissolving parliament and calling a December parliamentary election.

Tymoshenko, his estranged ally from the 2004 "orange" protests opposes the election and her allies have launched court action suspending preparations for the vote.

The head of the central bank`s council, Petro Poroshenko, said the Fund`s mission would "calm down investors".

"This does not mean that Ukraine urgently needs these funds," Poroshenko said late on Wednesday. "This is just an additional message to investors and depositors: the situation is under control."

The hryvnia hit an all time low to 5.9 per dollar last week, and was lifted thanks only to central bank interventions.

The central bank has a difficult balancing act -- letting the hryvnia weaken under the weight of the current account gap would take away one of the few constants in a country gripped by political turbulence since the 2004 "Orange Revolution".

Propping it up would deplete its reserves of $37.5 billion.

Figures released on Thursday showed the trade deficit for goods, which has pushed the current account deficit wider, soared to $12.489 billion in the first eight months of the year from $5.939 billion in the same period last year.

Reuters via Guardian