What next for Ukraine's economy?

ukraine protest large flag
Mass protests succeeded in toppling the pro-Moscow Ukrainian government but have left the country sliding into a financial crisis.

Ukraine's lightning-speed revolution has ushered in what could be weeks of uncertainty about how the country will pay its way and avoid economic collapse.

Until last Thursday, the eastern European country was relying on a $15 billion bailout by Russia to service its debts and pay for its imports.

The removal from power of Preslident Viktor Yanukovych, Moscow's ally, has prompted Russia to freeze that funding, and there is no alternative in sight.

Acting finance minister Yuriy Kolobov said Monday that Ukraine needs $35 billion over the next two years.

He wants countries such as Poland and the United States to come up with loans within a matter of weeks, to be followed by a big conference of international donors.

The European Union's senior foreign policy official was in Kiev on Monday to talk about ways of stabilizing the Ukrainian economy -- worth about $180 billion, roughly the same as Romania.

"The EU has been working on an international economic support package for Ukraine -- short, medium and long-term support to address the challenges of the Ukrainian economy," said European Commission spokesman Olivier Bailly.

The comprehensive free trade pact offered by the EU, and spurned by Yanukovych late last year in favor of closer ties with Moscow, was still on the table, but would have to wait until after elections due in May.

Related: Ukraine faces default as Russia aid stalls

"We are ready to sign this agreement once Ukraine is ready," Bailly said. "It's a sovereign choice they still have to make. Once a new government is formed, we could start the process toward this signing."

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And other foreign partners, including the International Monetary Fund, are also unlikely to commit money until they can negotiate the conditions of a rescue deal with a government formed on the basis of the election result. IMF spokesman Gerry Rice said, "We are talking to all interested parties."

Those conditions would include painful reforms, including reducing the huge amount the government spends subsidizing gas for consumers.

But here's the rub: Ukraine might not be able to wait that long.

It burned through $1.7 billion of its precious foreign currency reserves in January alone trying to prop up its currency. It had about $17 billion left at the end of January, and some economists reckon those reserves could fall to $12 billion or less by the end of this month -- worth just six weeks of imports.

"In order to avoid a complete collapse in the coming weeks, Ukraine needs money now," said Lubomir Mitov, emerging Europe chief economist at the Institute of International Finance. "Ukraine cannot survive without reforms in the next few months."

Related: Ukraine restricts money flow to stop bleeding

Ukraine has about $13 billion worth of debt falling due this year, including a $1 billion bond in June, arrears on Russian gas imports, and about $3 billion owed to the IMF.

Under the circumstances, it looks like the country will prioritize paying back debt before supporting the currency -- the hrvynia. Indeed, it was down 3% again Monday, and has fallen nearly 12% since the start of the year.

But that devaluation will ultimately make it harder for the government to service and repay foreign currency debt worth $16 billion falling due before the end of 2015.

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