Ukraine GDP to shrink as much as 14.5pct

Ukraine’s economy will contract as much as 14.5 per cent this year, though output may rise in the first quarter of 2010 because of the record slump at the start of 2009, central bank adviser Valeriy Lytvytskyi said. Ukraine is relying on a $16.4bn International Monetary Fund stand-by loan, secured in November last year, to support its financial system and national currency. Cooperation with the IMF has been suspended twice this year because of the government’s failure to reduce the budget deficit and the former Soviet state is struggling to persuade the IMF to unfreeze the financing.The central bank spent $300 million in December to cap hryvnia gains. The bank’s reserves presently total $26bn of which $5.5bn to $6bn is IMF money, he said. The reserves were $27.3bn through the end of November. The current account deficit will total $1bn in 2009, Lytvytskyi said. The economy contracted an annual 15.9 per cent in the third quarter after shrinking 17.8 per cent in the second quarter and a record 20.3 per cent in the first.