IMF Says Ukrainian Economy Shrunk By 6.5 Percent

Ukraine's economy is expected to contract by 6.5 percent in 2014, according to a report released Tuesday by the International Monetary Fund.



The IMF cited "intensification of the conflict in the East and escalation of the gas dispute with Gazprom," as two of the key elements affecting "the confidence, balance of payment flows, economic activity, and budget execution," of the country.



The report said that the Ukrainian government implemented policies broadly and as agreed, but by the end of May just one performance criteria was met. 



"The deterioration in the economic outlook, fiscal and quasi-fiscal pressures, and heightened balance of payment difficulties are putting the initial program targets in jeopardy," the report said. 



The IMF also put 2014 end-targets for Ukraine out of reach. 



The Ukrainian economy has been heavily dependent on Russia. But since late last year, Ukraine has been beset by a number of issues and neighboring Russia has played a key role in adding to the deterioration of the Ukranian economy – arming rebels, annexing Crimea and implementing several economic sanction on Ukrainian economy. 



The IMF approved a $1.39 billion disbursement under a stand-by arrangement for Ukraine that was signed in late April. It envisaged $16.67 billion to support the government's economic program. 



The Fund, however, said in the report that if the conflict continues, Ukraine will be in need of an additional $19 billion.  



www.aa.com.tr/en - Washington DC