Ukraine's leading English-language newspaper since 1995

KIEV, Ukraine (AP) _ Leaders of clashing Ukrainian parliamentary factions on Monday discussed legislation required to receive a crucial $16.5 billion loan from the International Monetary Fund as the country struggles to stay afloat amid a severe financial crisis.

The IMF made the loan conditional on the passage of laws aimed at boosting the shaken banking sector, but the deepening political crisis threatens to torpedo the deal.

The work of the Verkhovna Rada has been blocked all last week by allies of Prime Minister Yulia Tymoshenko, who is fighting an order by President Viktor Yushchenko to hold early parliamentary elections in December.

Experts hope the IMF loan, which amounts to nearly half of the country's current foreign currency reserves, will shore up the shaken financial sector and give the central bank the necessary reserves to defend the falling national currency, the hryvna, which has plunged over 20 percent in recent months.

"This will allow the National Bank to counter the devaluation pressures on the hryvna," said Olena Bilan, a macroeconomics analyst with Dragon Capital investment bank.

The hryvna plunged to a historic low of 6.01 to the dollar last week after a 40 percent fall in exports and a run on banks that stripped the banking sector of $3.4 billion this month as Ukrainians rushed to convert their savings into dollars.

Analysts say Ukraine is in for a painful economic downturn. Output in the steel industry, which accounts for 6 percent of the GDP and 40 percent of the country's exports, was down by 30 percent.

The country's main automobile producer, the Zaporizhye Automobile Building Plant, said Monday its output fell by 8.6 percent in September compared to last year's figures. The State Energy Regulating Committee announced that Ukrainians faced a 35 percent hike for house heating and cooking gas bills, according to media reports.

The stock market, which lost over 75 percent this year, after gaining 130 percent in 2007, opened with further losses of about 2 percent in morning trading Monday.