Ukraine crisis: 'Welcome to hell' warns minister as experts say country needs £21bn bailout

PM-designate Arseniy Yatsenyuk has warned 'extremely unpopular steps' would need to be taken to stabilise Ukraine's economy and politics

Click to follow
The Independent Online

Ukraine could need bailout loans amounting to £21 billion just to get through the next two years, acting government officials have warned.

Ukrainian MPs are expected to vote on the new cabinet line-up today as the interim government warned "unpopular steps" would be taken to stabilise the economy and political situation.

The vote comes as "criminals wearing military fatigues" seized the regional government and parliament headquarters on Ukraine's Crimea peninsula this morning.

The Russian flag has been raised over the two buildings in the capital, Simferopol. Ukraine security forces are now on alert after the building was overtaken during the early hours of this morning.

PM-designate Arseniy Yatsenyuk and other new ministers were presented to Kiev's Independence Square yesterday evening.  The 39-year-old served as economy minister, foreign minister and parliamentary speaker before ousted President Viktor Yanukovych took office in 2010.

Mr Yatsenyuk, who is expected to to lead the cabinet until early presidential elections, told the BBC "extremely unpopular steps" would be necessary to fix the "desperate financial plight" he said was created by a "corrupted" previous government.

"We are on the brink of a disaster and this is the government of political suiciders. So welcome to hell," he said.

On Wednesday, the US Secretary of State John Kerry said it was considering $1 billion (£600 million) in US loan guarantees and additional funding to help Kiev, as well as possible budget support, but said no firm decisions had been made.

"We are formulating initially a $1 billion loan guarantee with some other pieces, but we are also looking at the possibility of additional assistance," Mr Kerry said. The Obama administration was discussing the matter internally, he said.

One of the first jobs for Mr Yatsenyuk and other members of his new Cabinet will be seeking outside financial help from the European Union and the International Monetary Fund.

The IMF last agreed to loan Ukraine $15 billion in 2010, but froze the deal in 2011 after Kiev failed to implement the required reforms, including removing gas price subsidies.

Additional reporting by agencies