Ukraine’s economy has contracted by 25 percent amid conflict in the country’s eastern regions and hundreds of businesses have been forced to close, Ukrainian Prime Minister Arseniy Yatsenyuk said on Tuesday during a conference call with regional governors over budget fulfillment, Russian news media reports.
“We have lost a quarter of the Ukrainian economy. Because of the war … hundreds of companies have been closed,” Yatsenyuk said.
The conflict in the east has had a direct impact on the Ukrainian economy and the country’s national currency has plummeted by 80% as the economy faced a looming default.
In March, the International Monetary Fund (IMF) approved a four-year $17.5 billion financial aid program for Ukraine. In exchange for loans to keep its economy afloat, Kiev committed to implementing deep political, social, and financial reforms in order to restore growth.
Ukrainian Finance Minister Natalia Jaresko said Earlier in March that the IMF’s $17.5 billion wouldn’t be enough to revive its ailing economy and that the government would seek more financial assistance from international lenders.
The Ukrainian government expects that international aid will help the country overcome the crisis in the short-term, however experts have warned that the terms of imposing austerity measures would only make the situation worse.
Ratings firm Moody’s cut Ukraine’s sovereign debt rating to one notch above default on Tuesday, saying that creditors will be forced to take deep losses in a debt restructuring.
“The key driver of the downgrade is the likelihood of external private creditors incurring substantial losses as a result of the government’s plan to restructure the majority of its outstanding Eurobonds” and other debt, Moody’s Investors Service said.
Ukraine’s long-term issuer and government debt ratings were downgraded to Ca from Caa3, and the outlook remained negative, the firm said.