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Germany praised Ukraines new government for pursuing an ambitious path to overhaul its economy as the country seeks to expand a bailout that financier George Soros said may require as much as $50 billion.

In Germany to seek new loans on top of Ukraines $17 billion International Monetary Fund-led rescue, Prime Minister Arseniy Yatsenyuk warned that Ukraines separatist conflict is a threat to Europe and people in the countrys easternmost regions were hostages of Russian terrorists. Bond yields fell for a second day as Soros said that the conflict poses a bigger danger to Europes economy than Greece.

Europe needs to wake up and recognize that it is under attack from Russia, Soros said in an article in the New York Review of Books. European Union leaders are mishandling the situation, and if they dont produce an impressive assistance program in response to an aggressive Ukrainian reform program, the country will probably fail, he said.

Ukraine is struggling to staunch an economic contraction that reached 7.5 percent last year, according to the central bank. As the conflict decimates businesses in the countrys industrial heartland, the government in Kiev is seeking to boost its aid package by $15 billion.

The EUs executive commission proposed an additional 1.8 billion euros ($2.1 billion) in loans to Ukraine for this year and next, according to a statement on the blocs website. Disbursement of the aid, which must still be approved by European Parliament and the European Council, will depend on Ukraines adherence to the conditions of the IMF program, which include fiscal consolidation, changes in the energy and banking industries, and other measures, according to the statement.

Yatsenyuks visit to Germany coincides with the arrival of an IMF mission to Kiev, the UNIAN news service reported today. Ukrainian policy makers are seeking three tranches of the IMF bailout as early as this month, including two that were delayed last year following protracted negotiations to form a government following snap elections.

We are indeed in a critical financial situation, Finance Minister Natalie Jaresko said in an interview yesterday. Time is of the essence.

Further aid will probably mean a restructuring of debt held in foreign denominations wont be necessary, Jaresko said. The country is addressing creditors concerns over tardy reforms by tackling entrenched problems including corruption, tax evasion and lagging state asset sales, she said.

The prime minister reported in a very impressive way the reform plans that Ukraine has embarked on, German Chancellor Angela Merkel said at a news conference with Yatsenyuk in Berlin. The newly elected parliament showed that it wants to pursue the path of a transparent and democratic land. Germany wants to support Ukraine on this path.

Merkels government yesterday agreed to back 500 million euros in credit guarantees for Ukraine.

Original post:
Ukraine Warns Conflict Threatens EU as Soros Calls for Rescue