Ukraine: Economy to Recess by 9% in Q1 2015, Says IMF

Despite some encouraging signs related to Ukraine’s economy, the International Monetary Fund issued a statement yesterday saying that the Ukrainian economy has declined sharply as a result of the conflict, and that it may continue to do so should sporadic instances of fighting in eastern Ukraine continue. IMF Mission Chief Nikolay Gueorguiev has spoken in favor of the IMF’s stimulus, and only days ago indicated that the nearly $18 billion in stimulus funds was beginning to take hold.

However, Geoorguiev recently indicated that the economy could shrink by as much as 9% during the first quarter of 2015. The country’s inflation rate is similarly high, and legislation passed by the Ukrainian parliament granting the government the ability to cease making debt payments suggest that recovery is still some ways off. Georguiev did state, nonetheless, that Ukraine’s commit to reform is still strong and that a second tranche of the bailout will be released if it continues to appear committed.

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News Briefs:

  • Perhaps unsurprisingly, Russian state-owned missile manufacturer released a statement declaring that Russia did not shoot down a Malaysian Airlines flight in July 2014. The plane that was targeted carried 298 people, all of whom died. The statement instead leveled the blame on the Ukrainian military on the basis that the holes in the plane resemble those made by missiles used by the Ukrainian military and that have not been used in Russia since 1999.
  • Kyrgyzstan slashed its 2015 growth outlook and announced decreased gold output for the coming year. According to Kyrgyz officials the nation’s budget had to be revised due to slower-than-expected economic growth and a wider fiscal gap. The economy is estimated to grow by 2%, a 4.2% drop from the previously estimated 6.2%, a marked decrease from the 3.6% growth experienced in 2014. The budget deficit will also grow to 5.7% of the Kyrgyz GDP, officials stated. One of the chief reasons for the drop has been the sharp decline in remittances working in Russia.
  • As a result of rounds of alternating Russia-US+EU sanctions and Russian economic woes, the Belarusian economy has lost approximately $3 billion, a new report by The Moscow Times suggests. The loss is due chiefly to Russia’s own economic crisis; however bans on Western food products have also taken a toll given Belarus’s status as a transit nation. The Belarusian economy recessed by 2% during the first quarter of 2015, mirroring the Russian economy.
  • On the heels of progress made by Kazakhstan and Turkmenistan in officially demarcating Caspian Sea maritime borders, an Iranian representative in Caspian Sea legal status talks indicated that progress had been made on the remaining issues separating the key littoral states. In emphasizing what he described as unprecedented progress, the Iranian deputy foreign minister for Asia and Pacific Affairs  stated that Iran has hosted 10 meetings of littoral states and is intent on resolving lingering issues during the next summit meeting in Astana, Kazakhstan.
  • World Bank leadership announced the passing of a $10 million grant to finance public finance reform in Tajikistan. The project, which will total $21 million and will be joint-financed by the UK Department for International Development, will target transparency and effectiveness in the management of public sector projects. Among the expected improvements are the modernization of automated financial management systems, more efficient budget execution, and greater “accounting and financial reporting functions across government entities,” including the creation of the country’s first standardized auditing methodology. Tajikistan is home to rampant corruption that spreads across all levels of government, according to Transparency International.
  • Uzbek human rights activist Azam Farmonov was given five more years in prison for “disobeying prison rules,” according to a new report published by The Diplomat. Yakubova was nearing the completion of a nine year term he served for allegedly stirring up public discontent. The charges against him were raised on dubious ground according to the Human Rights Watch, which alleged Yakubova was merely a “prisoner of conscious” and that charges against him were politically motivated.

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