Ukrainian President Viktor Yushchenko on Monday called for unprecedented cuts in government spending amidst a desperate quest for more credit as the government battles with a looming national budgetary crisis.

Government staffing cuts of 20 per cent, formation of a national emergency financing fund, and an all-out effort to secure loans from the International Monetary Fund (IMF) topped a list of proposals offered by Yushchenko and his staff at an emergency meeting of the country's National Security Council.

Ukraine has been hard hit by the financial instability and economic downturn sweeping the world. Tax receipts have been gutted. There have also been runs on the nation's banks, frightening off international capital and hiking the cost of interest.

According to Interfax, Yushchenko also said Ukraine's government should create a "national stabilisation fund" drawn from domestic capital markets to tide over state spending.

"We should have the resources in Ukraine," Yushchenko said.

Calming rising depositor panic and preventing a run on banks are critical to keeping capital available. Yushchenko said the government should spend one billion of its cash reserves to guarantee bank deposits of up to 20 thousand dollars in value. Such a move would cover 98 per cent of all savings in banks, he argued.

Just in the last week, the National Bank of Ukraine offered more than one billion dollars in emergency loans to a group of commercial banks with wobbly finances. Since the beginning of October, the bank has spent another billion dollars propping up the value of the national currency, the hryvna.

An emergency credit from the IMF was badly-needed by Ukraine, an NBU official said. Such an influx would be a moral vote of confidence in the former Soviet republic's economy. A cash injection would also stave off pressure that could lead to a dangerous jump in the country's 3.2 per cent government spending deficit, the official said.

"We need the loan. The size of the sum is possibly not as important, as their announcement they would be willing to extend the credit for this critical situation of ours," said NBU head Volodymyr Stelmakh.

Ukrainian politicians last week have said talks between Kiev and the IMF were advanced, and said that Ukraine might soon receive a low-cost credit valued between 3 and 14 million dollars.

IMF officials have refused to comment beyond confirming that talks with the Ukrainian government have taken place.

Yushchenko was scheduled to meet with leaders of the country's major political parties later in the day to discuss the budget crisis measures.

Ukraine's ability to deal with the world financial crisis and economic slowdown has been weakened by political infighting, with faction leaders blaming their opponents for the country's economy troubles. Yushchenko dissolved parliament earlier this month after a pro-West ruling coalition fell apart.

International capital has flooded out of Ukraine, with the national PFTS stock market losing some 43 per cent of its value in October alone.

The burgeoning cash crunch caused by falling state revenues has forced the Ukrainian government to face a number of unpleasant choices, which include supporting besieged banks, sustaining the national currency, or reducing popular social programmes like subsidised food and utilities for the poor only months before national elections.