The International Monetary Fund (IMF) last night agreed to offer Ukraine up to $16.5bn in loans as the country seeks to "maintain confidence and economic and financial stability", according to The Independent.

Ukraine has been one the worst hit countries in the global financial crisis, with its stock market falling by more than 10 per cent on Friday alone last week, before trading was suspended. It was the third time in a week that the authorities had halted the exchange.

The IMF said that the package would help to meet the balance of payments needs created by the combined effects of a collapse in steel prices and the global credit turmoil.

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The IMF`s managing director, Dominique Strauss-Kahn, said: "The authorities` programme is intended to support Ukraine`s return to economic and financial stability, by addressing financial sector liquidity and solvency problems, by smoothing the adjustment to large external shocks and by reducing inflation. At the same time, it will guard against a deep output decline by insulating household and corporations to the extent possible."

The whole amount offered by the IMF, which has been offered as a two-year standby facility, may not be fully drawn.

The loan is subject to the conditions that the government will set a balanced budget and introduce reforms to support the banking sector.

The move by the IMF follows a $2.1bn loan granted to Iceland last week. Pakistan, Hungary and Belarus are also in talks with the IMF about possible funding.