KIEV -- Ukrainian President Leonid Kuchma on Monday tightened conditions for granting aid to state firms, the first of a planned series of measures intended to shore up the collapsing economy, the president's economic adviser said.


A presidential decree said financial assistance to state companies, mostly in the form of loans, will be given only after they provide a business plan or restructuring program as a proof that they need the money and can pay back the credit.


It also ordered the government to work out a mechanism for providing outright aid to some enterprises of strategic importance. The decree defined state enterprises as those in which the state has at least a 50 percent share.


"This decree is aimed at strengthening discipline with enterprise directors," said Kuchma's economic adviser, Volodymyr Kuznetsov.


Six other draft decrees on stabilizing the economy, including currency regulation, customs policy and tax reform, are likely to be signed later this week, Kuznetsov said.


"The decrees are aimed at normalizing the economic situation and financial stabilization. The state should live on what it earns," he said.


Ukrainian enterprises owe each other 200 trillion karbovanets ($4.4 billion) and the mutual indebtedness is one of the country's main economic problems.


Kuznetsov has said earlier the central bank had been ordered to draft a system of promissory notes for Ukrainian enterprises, adding that this will allow for a mechanism for bankruptcy.


Kuchma, elected last month on promises to improve the economy, said last week that half the country's industry was standing idle and that the budget deficit was 20 percent of gross domestic product.


Ukraine stands to obtain $4 billion in pledged Western aid if it goes ahead with serious market reforms. Kuchma, who beat incumbent Leonid Kravchuk in the July presidential poll, has pledged to cooperate with the International Monetary Fund to draft an economic reform program.