KIEV -- Ukrainian President Leonid Kuchma appointed two allies to top government posts Monday and fiercely defended his proposal for radical free-market reform.


Kuchma, 100 days in power, SAID he was not ready to compromise with the largely conservative parliament over his bold plan for painful change.


He said financial stabilization was his top priority in the next two months.


The post-Soviet Ukrainian economy is in tatters, production and living standards have nosedived and prices are surging.


Last week the government freed some prices in a liberalized move in line with Kuchma's program, blessed by the West. It also scrapped an artificial official exchange rate for the karbovanets currency.


Prices for bread and other basic foods are expected to surgeand panic-buying swept the Ukraine Monday with long queues forming in Kiev.


"It's time to stop deceiving our own people. We must face the truth," Kuchma said. "It is absurd to expect production to stabilize. What we need is financial stabilization.


"Where is the alternative to the market?" he added. "Who is going to buy our production? Most Ukrainian production is not needed by anyone. We ourselves do not want to buy what we produce."


Ukraine's economic reforms has long lagged behind those in Russia, but Kuchma promised to change this after his election victory. He has already won promises of financial support from the International Monetary Fund and from other donor states.


Kuchma said he had appointed liberal Viktor Pynzenyk as first deputy prime minister in charge of economic reforms.


Another ally, Petro Sabluk, became a deputy premier in charge of agriculture while deputy premier Yevhen Marchuk was promoted to the post of first deputy prime minister in charge of the fight against organized crime.


Pynzenyk was a deputy prime minister in a 1993 government then headed by Kuchma, but he resigned in August 1993, accusing conservatives of stalling reforms. Kuchma followed suit a month later.


The new appointments seemed designed to quash resistance to reforms from Prime Minister Vitaly Masol, chosen by previous president Leonid Kravchuk.


"The president made these new appointments to speed up reforms and to boost their support by the government"," Kuchma's top adviser, Olexander Razumkov, told Reuters.


Kuchma also implicitly warned parliament against trying to stall painful reforms and hinted he could resort to a referendum to strengthen his position through constitutional changes.


"I am ready for any compromise with the Supreme Soviet (parliament) with the exception of two questions. The first is radical economic reforms ... The second is building up strong executive power," he said.


"Probably we need a referendum on a new constitution. I'm ready to take responsibility for reforms. I am not afraid."


A loaf of bread now costs between 3,000 and 4,000 karbovanets. It is expected to go up to 14,000 or 15,000.


The current exchange rate is 78,000 karbovanets to the dollar and street traders offer about 90,000.