Ukraine is preparing to submit proposals to the International Monetary Fund to reduce subsidies to state gas company Naftogaz without raising tariffs for the population, Deputy Prime Minister Yuriy Boyko was quoted as saying on Thursday.

"We have found a model that will allow us, without touching the socially unprotected layers of population, to offer a model for the IMF that will allow us to show that we will reduce the deficit of Naftogaz Ukrainy," the official said, Interfax-Ukraine reported.

Analysts say Ukraine needs IMF financing as it struggles with a recession and a wide current account deficit. It also needs to pay more than $10 billion to service foreign-currency-denominated debt to the end of 2014.

Ukraine hasn't had any IMF financing since 2010, when a $15 billion program was halted after the government failed to raise household gas prices.

Mr. Boyko said the new measures will open up Ukraine 's gas market to private companies from the East and the West, without elaborating.

The latest IMF mission visited Ukraine on Oct. 17-29 to assess its macroeconomic situation. The mission concluded that " Ukraine 's significant external financing needs remain a key vulnerability" for its economy and made a number of recommendations that would help to unlock IMF financing for the former Soviet republic.

In particular, it said Ukraine needs increased exchange rate flexibility combined with policies to strengthen the financial sector; ambitious fiscal consolidation; increases in domestic energy tariffs, and comprehensive structural reforms to improve the business climate and support growth.
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