Ukraine urges EU to extend emergency loans beyond its borders

(BRUSSELS) - Ukrainian Vice Premier Hrihoriy Nemyria urged the European Union Thursday to use some "creative thinking" to extend emergency loans to crisis-hit countries -- such as his -- bordering the EU.

Stressing that 30 percent of the Ukrainian banking system belongs to western European banks, he said this creates "a de facto interdependence that requires creative thinking and a willingness ... to use the instruments and the resources that are currently available for (EU members) Hungary, Lavia," for their non-EU neighbours, he told a conference in Brussels.

"I'm talking about the potential use of the emergency fund," he added, referring to a 25-billion-euro pot currently available only to EU members outside of the eurozone.

Hungary and Latvia, destablised by the economic crisis, have been allowed to dip into the fund, which may be increased at a meeting of EU heads of state and government in Brussels on Thursday and Friday,

"If the EU neighbourhood is destabilised as a result (of the crisis)... then the immediate and negative impact will be felt very deeply bot just in the neigbourhood but also just as much in the EU," Nemyria warned.

EU External Relations Commissioner Benita Ferrero-Waldner said there were no plans to extend the emergency loans beyond the EU borders.

She added that Ukraine must comply with IMF conditions if it wants help.

The IMF is considering whether to grant a second instalment of 1.9 billion dollars from a 16.4-billion-dollar loan package to help the country cope with a severe economic crisis.

But Ukraine risks missing out on the money over concerns for its ballooning budget deficit and political tensions between Tymoshenko and Yushchenko, which have paralysed decision-making in the country.