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IMF warns of Ukraine funding shortfall if fighting persists

The International Monetary Fund has says it is worried about its bailout program for Ukraine not being enough to meet its targets. The lender noted that fighting in the east of the country had caused massive costs.

In its first in-depth assessment

since granting Ukraine a $17-billion (12.9-billion-euro) bailout program

in March, the International Monetary Fund said Tuesday that "risks were looming large" for the country's economy.

The IMF warned that Ukraine would not be able to meet all of its targets under the bailout program, mostly due to the ongoing fighting in the country's eastern region and a gas dispute with Russia, making imports far more expensive for the government in Kyiv.

IMF officials noted that the current rescue plan already faced a $3.5-billion funding shortfall through 2015, with Ukraine's economy forecast to contract by 6.5 percent this year alone.

Dim outlook

Analysts said the country's gross domestic product (GDP) night take an even deeper dive because of the enormous costs caused by fighting pro-Russia separatists.

The IMF reckoned that if military operations persisted through next year, Ukraine would most likely need additional support worth $19 billion just to shore up its central bank reserves.

However, the fund confirmed Kyiv was currently on track with most of the loan conditions so far, allowing the disbursement of $1.7 billion, with the next installment of about $2.7 billion due in mid-December.

hg/sgb (Reuters, AP)

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