In comments distributed by the IMF, managing director Christine Lagarde confirmed that Ukraine had asked for a new, longer-term loan to replace its current $17 billion program.

Poroshenko has asked the IMF to replace the current $17 billion Stand-By Arrangement with new money from its Extended Fund Facility, which typically runs for 10 years rather than the 3-5 year tenor of SBA loans.

Meanwhile Kyiv’s finance minister Natalia Jarezko said on her Facebook page that Ukraine also wants to start talks with private bondholders. She didn’t specify whether the country would want just to extend the repayment schedule for its debts, or have them written down, but the price of Ukraine’s dollar-denominated Eurobonds has plummeted in recent days as investors brace for a restructuring. A bond maturing in September this year now yields over 75%.

The biggest private holder of Ukrainian debt is the asset manager Franklin Templeton Ltd., with over $2.5 billion in such bonds as per its last disclosure in September.

Debt restructuring has become near-inevitable after the loss of Crimea to annexation by Russia, alone with a prolonged war in two provinces in eastern Ukraine that has cost over 5,000 lives in the last eight months. The economy shrunk by 7.5% last year, according to central bank head Valeria Gontareva, the biggest annual drop since World War 2.

At the same time, the country’s currency, the hryvnia, lost half of its value against the dollar, putting most of the banking sector on the verge of bankruptcy, while official foreign reserves have fallen to only $7.5 billion–even though the central bank stopped intervening to support the currency in November.

Poroshenko tried and failed last year in efforts to arrange an international donors’ conference for Ukraine that would write off some of its debts and secure more aid.

The European Union, in particular, promised €11 billion in financing last year but has been reluctant to release the money to a country that, by the admission of its new economy minister Aivaras Avramovicius, is “the most corrupt country in Europe”–even though it was Ukraine’s aspiration to join the EU that led to the political crisis of last year.

To make things worse, debt restructuring talks could be complicated by the fact that Russia now has the right to demand repayment of $3 billion in debts that it lent to Ukraine while its protégé, Viktor Yanukovych, was still president. Moscow hasn’t yet said whether it intends to exercise that right.

Poroshenko’s request comes after two weeks in which Ukrainian forces have suffered heavy losses as fighting in the east of the country has intensified. Rebels claim to have retaken control of Donetsk airport after a battle lasting months, while artillery bombardments from both sides have resulted in a sharp rise in civilian deaths.

Ukraine’s President has accused Russia of having 9,000 of its troops on Ukrainian soil, and says the rebels have been supported by Russian army artillery. Moscow denies the claims, despite a wealth of video evidence to the contrary posted online, and despite admissions by President Vladimir Putin that his soldiers are fighting there as “volunteers”.

At four-way peace talks in Berlin late Wednesday, the two sides agreed to a demarcation line from which they would pull back heavy weaponry, according to German Foreign Minister Frank Walter Steinmeier. That’s more or less in line with a proposal by Russian President Vladimir Putin that Poroshenko rejected earlier this week.

Washington remains unconvinced by the plan, however. Deutsche Welle quoted U.S. ambassador to the U.N., Samantha Power, as saying that it seeks “to legitimize territorial gains made by separatists in September as well as Russian personnel and equipment on the territory of Ukraine.”

“Let us pull the veil away from Putin’s peace plan and call it for what it is – a Russian occupation plan,” Power said.