Ukrainian President Petro Poroshenko demanded the resignation of Prime Minister Arseniy Yatsenyuk on Tuesday.
Poroshenko justified the measure as a necessary move to rebuild trust in the pro-West leadership, the president's spokesman Sviatoslav Tsegolko said in Kiev.
The current coalition, governing since the end of 2014, is deeply divided and feeling the political and financial strains of the ongoing conflict with pro-Russian separatists.
Yatsenyuk rejected the call in a 50-minute report before parliament. "It's a difficult situation, but there are first signs of improvement."
Outside the parliament, hundreds of people protested against Yatsenyuk's policies in the pouring rain. Under pressure from the IMF to introduce cost-cutting reforms, the government has lost much support among the electorate following a significant raise in energy prices.
Yatsenyuk continued to defend his policies to the rest of the government. "For the first time in the past two years, there's been economic growth in the third and fourth quarter," the prime minister said.
"The government is always being criticized, and that's normal. We're used to it."