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IMF reports Ukrainian economy worsening in January-October 2013

December 20, 2013, 12:25 UTC+3 WASHINGTON
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WASHINGTON, December 20. /ITAR-TASS/. The situation in the Ukrainian economy is worsening, the International Monetary Fund (IMF) reported on Thursday.

“The Ukrainian economy has been in recession since mid-2012, and the outlook remains challenging. In January-September 2013 GDP contracted by 1ј percent y-o-y, reflecting lower demand for Ukrainian exports and falling investments,” the IMF said in a release. It also stresses: “Under currently planned policies, modest growth should return in 2014, driven by improvements in external demand, strong grain exports, and continuing consumption expansion.” In the view of the IMF experts, “However, this outlook is subject to significant risks, emanating from the inconsistent policy mix and heightened political and economic uncertainty in recent weeks.”

The fund’s experts called the Ukrainian energy sector “inefficient and opaque.” They believe that is “continues to weigh heavily on public finances and the economy. Overall energy subsidies in Ukraine reached about 75% of GDP in 2012.”

The IMF stressed that Ukraine continued to timely make all the payments to the IMF and “the authorities have reaffirmed their commitment to repay all outstanding Fund credit.”

The IMF said that “despite the Ukrainian authorities’ efforts to maintain macroeconomic stability amid worsening economic conditions, the current macroeconomic policy mix has generated large external and fiscal imbalances and has contributed to deepening the recession.” The Fund’s “directors recommended the authorities implement a package of comprehensive policy adjustments in several areas, including curtailing the fiscal and external current account deficits, phasing out energy subsidies, strengthening the banking sector, and improving the external competitiveness of the economy.

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