Ukraine is asking the international community to provide more military and financial support as the US secretary of state, John Kerry, flies into Kiev on Thursday. A team from the International Monetary Fund is also in the capital as Ukraine attempts to negotiate a bailout to avert economic collapse. The talks with the US will touch on military support.

The foreign minister, Pavlo Klimkin, told a group of western journalists on Wednesday that negotiations with the IMF were “difficult but constructive”, and that there was hope that a package would be agreed soon.

Ukraine’s hryvnia was the world’s worst-performing currency last year, and is set to fall even further this week as the national bank says it will stop setting an indicative level for the currency in order to let it find its natural level.

The currency drop has caused inflation to surge, eroding wages, and the country’s banking system has essentially collapsed.

As default becomes ever more likely, Kiev is also spending $5m-$10m (£3.3m-£6.6m) a day to fight the war against Russia-backed separatists in the east of the country, according to some estimates. The conflict has also destroyed infrastructure and reduced production in the east, as well as creating hundreds of thousands of internally displaced persons, all of which are likely to have longer-term economic consequences.

John Kerry, the US secretary of state. Ukraine’s economy will be on the agenda during his visit on Thursday. Photograph: Reuters

Ukraine requires about $15bn of extra funds in addition to a $17bn two-year IMF programme agreed last year, according to estimates.

“An IMF plus EU plus G7 package would provide real ground for assistance to Ukraine, and on this basis we could organise a reform and investor conference in Brussels,” Klimkin said. The economy will also be on the agenda during Kerry’s visit, during which the secretary of state will meet Ukraine’s president and prime minister.

Ukraine’s problems are “very solvable”, according to Tim Ash, senior strategist at Standard Bank, but the country has not received enough support from the international community. “Ukraine’s main problem is a lack of leadership in the west,” he said.

Many policymakers in western capitals fear that allowing Ukraine to go under would be a signal that the west is powerless in the face of Russian aggression, but at the same time there is little appetite to stump up actual funds for Kiev.

“Europe needs to wake up and recognise that it is under attack from Russia,” the financier George Soros wrote in a recent column in the New York Review of Books. “Assisting Ukraine should also be considered as a defence expenditure by the EU countries. Framed this way, the amounts currently contemplated shrink into insignificance.”

Kiev is spending up to $10m a day in the war against Russia-backed separatists, according to estimates. Photograph: Reuters

There has also been speculation that Russia could call in a $3bn loan early, which would put further pressure on Kiev and irritate other lenders, though Klimkin said even if Moscow demanded the money tomorrow, it would require a lengthy court process before any payment would need to be made.

Ukrainian leaders are also likely to talk to Kerry about the need for weapons. The US has been reluctant to provide lethal military aid to Kiev, but there have been signs that the mood in Washington is changing.

On Wednesday, Barack Obama’s nominee to head the Pentagon signalled his intention to push the US president in a more aggressive military direction for the remainder of his term. Ashton Carter told the Senate armed services committee that he “very much incline[d]” towards arming the Ukrainian government. He said he was not in a position to say the US was “in fact doing enough” to deter “Russian aggression in the Baltics”, which he called “very important”.

Klimkin said: “We’ve been getting closer to receiving more military-technical assistance. It’s not about buying a couple of tanks … It’s about modern warfare, training, logistics, organisation.”

He said Ukraine desperately needed hi-tech radio, radar and reconnaissance equipment to stop Ukrainian soldiers having their communications intercepted and improve battlefield efficiency. “We can’t win the war against Russia … But what we need to counter the aggression and to defend our country is not to lose the war,” Klimkin said.

At least three people were killed in a series of shellings in the eastern Ukrainian city of Donetsk on Wednesday that pro-Russian separatists said were Uragan missiles fired by Ukrainian forces Guardian

The ongoing military situation is another barrier to gaining financial aid. The IMF does not loan to countries with ongoing conflicts, which has been one reason behind Kiev labelling the conflict in the east an “anti-terrorist operation” rather than a war.

“The Ukrainians have done everything the west asked them to – they did not fight for Crimea, they have tried to negotiate over east Ukraine, they have let their exchange rate go and they have paid their Gazprom debt, and they have received very little in return,” Ash said. “Structural reform does not work in a conflict situation. The west has to bite the bullet and decide it has to be now or never. This is a reform-oriented government and the best chance we will ever have to help Ukraine.”

The west has to bite the bullet and decide it has to be now or never Tim Ash, senior strategist at Standard Bank

For all Ukraine’s problems, many agree that the new government is full of people genuinely committed to reforms and it offers the best chance possible to bring Ukraine closer to Europe. Some, however, are concerned that despite the huge changes that came about after last year’s Maidan revolution, the same oligarchic way of doing things persists.

“The ‘war argument’ is used to conserve the same way of doing things as in the past,” said MP Victoria Voytitska, who worked in business for many years before standing for election to Ukraine’s new parliament. “In Davos, all I heard from Ukraine was ‘Give me money, give me money, give me money.’ Because if you don’t, then we’ll collapse and it will be a threat to you. You don’t speak like this. What we need is a real action plan with specific reforms for February, March, and so on. Not some bullshit about how Ukraine will look in 2020.”