WASHINGTON (AFP) - Russia does not want to sink Ukraine's economy, as shown by its willingness to continue selling gas to the country, International Monetary Fund chief Christine Lagarde said Wednesday.
Even as Kiev battles pro-Moscow rebels in the east of Ukraine, it should continue to get some support from Russia as it seeks to turn its economic fortunes, she said.
"Ukraine is in a very, very difficult situation," she told MSNBC television.
"In the last say 22 or 23 years, we have been dealing with Ukraine, we've seen for the first time a team of people who are really determined to reform their economy."
She said trying to implement reforms under an IMF bailout programme while fighting a war with secessionists in the east "is like trying to walk while carrying this big burden with you at the same time".
But she acknowledged that, at least economically, Moscow is lending support by not forcing immediate payment on US$3 billion (S$4 billion) that Kiev owes it, and has agreed to a new deal to continue supplying the country natural gas.
"I think Russia doesn't want Ukraine to collapse, because I don't think it would be in its interest. Because it is a supplier, because it is a creditor, and because it wants to get paid and reimbursed at the end of the day," she said.
"You want to get your money back, and so there has been a deal between Russia and Ukraine on the payment of gas arrears, on the advance payment for gas."
She said the country's fate is still deeply tied to resolving the conflict with rebels, despite the strong financial support the IMF and Western governments have proffered.
"What we are trying to help Ukraine with is a set of reforms... But all of that is really going to depend on how it stabilises in the east of Ukraine" and ends the fighting, she said.