The International Monetary Fund (IMF) says it has lowered its forecast for Ukraine's war-battered economy, predicting the economy will contract by 9 percent during 2015 -- due in large part to "the unresolved conflict in the east."
It said the IMF's Ukraine mission "has revised down growth projections for 2015 to negative 9 percent and projects end-year inflation at 46 percent."
The downward revision on May 31 of Ukraine's projected gross domestic product – the value of everything the country produces -- followed a two-week visit by an IMF delegation to Kyiv that was completed on May 29.
Ukraine is nearly bankrupt and is fighting a war in its east against Russian-backed separatists.
The government in Kyiv is hoping the IMF will disburse a second tranche of credit of about $2.5 billion under its four-year, $17.5 billion bailout program.
The IMF said its mission in Kyiv had held "constructive discussions" with Ukrainian government authorities during the previous two weeks on the policies needed to complete the first review of the IMF financial support package, known as the Extended Fund Facility Arrangement (EFF).
The head of an IMF team that visited Ukraine, Nikolay Gueorguiev, said "understandings" had been reached with Ukrainian authorities on most issues and that there would be further discussions in the coming days to finalize a staff-level agreement for approval by the IMF board.
Despite the downward growth revision, Gueorguiev gave a positive assessment of progress by Kyiv's government on reform.
He said "good implementation" of the reform program had been achieved by Kyiv despite the unresolved conflict in the east and that the IMF mission saw signs emerging that "economic stability is gradually taking hold."
He said Kyiv's commitment to its reform program "remains strong," and that "all structural benchmarks due in the spring are on course to be met, albeit some with delay."
Representatives from the European Bank for Reconstruction and Development (EBRD) are due to start a five-day visit to Kyiv on June 1 to discuss the political and economic reforms that are under way in Ukraine.
The EBRD said in a statement on May 31 that its delegation included members of the bank's board of directors such as Tamsyn Barton, who represents the European Investment Bank, and Peter Bash, the acting director representing the European Union.