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IMF Lowers Ukraine Growth Forecast, Cites Progress on Kyiv Reforms

The International Monetary Fund (IMF) logo is seen at the IMF headquarters building during the 2013 Spring Meeting of the International Monetary Fund and World Bank in Washington, April 18, 2013.

The International Monetary Fund has lowered its growth forecast for Ukraine's moribund economy to minus 9 percent, while citing progress toward a deal with Kyiv on reforms that could clear the way for further IMF help.

The negative growth projection - down from a 5 percent estimate in April - was announced Sunday in Kyiv, along with estimates of 46 percent inflation this year. IMF officials linked the inflation projection to surging oil prices and a large exchange rate depreciation earlier this year, as a pro-Russian rebellion raged in Ukraine's east.

Despite those forecasts, IMF Ukraine mission chief Nikolay Gueorguiev - in a statement Sunday - said a two-week IMF review of a bailout deal reached earlier this year showed that "economic stability is gradually taking hold" in the war-shattered country.

The IMF delegation is evaluating Kyiv's progress toward meeting conditions for the second installment of the four-year $17.5 billion IMF bailout. The mission is expected to report to the IMF board in June, with the second installment of about $2.5 billion hinging on those recommendations.

The IMF statement did not reference ongoing separate talks between Kyiv and an international creditors' committee on terms for restructuring the country's estimated $23 billion debt.

Facing a $15 billion funding gap, Kyiv says it will not be able to make timely repayments to the IMF without cutting payments on bonds issued by previous Kyiv governments unless a deal is reached.

Ukraine's Finance Ministry said last week that restructuring talks were moving forward and that the two sides would confer in early June to assess progress on an agreement.