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Ukraine to Need Another $19 Billion from the IMF

In its first full review since agreeing a $16.7bn standby facility earlier this year, the IMF warned that the two main risks it had foreseen ? intensification of the conflict in the east and a natural gas shut-off by Russia ? had materialised.

If fighting continued in eastern Ukraine at the same level throughout 2015, it added, Ukraine would need additional financing of $19bn to shore up its central bank reserves.

"I am afraid that this should be the IMF's base case. The original IMF programme was built on totally unrealistic assumptions," said Tim Ash, economist at Standard Bank, in a note to clients. "The main question being asked by investors is when, not if, Ukraine will be forced to restructure/reprofile its debt ratios."

Under its base case, it forecast Ukraine's economy would contract 6.5 per cent this year ? making it one of the worst performers in the world ? rather than the 5 per cent previously assumed. Growth next year would be only 1 per cent, down from 2 per cent previously forecast, even if the fighting stopped soon.

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