WASHINGTON, March 12 (UPI) -- Energy sector reforms and the addressing of "deep-rooted" structural issues in Ukraine will return the country's economy to growth, the IMF said.
The International Monetary Fund announced it approved the immediate disbursement of about $5 billion to Ukraine, with a little more than half of that allocated to budget support for the former Soviet republic.
The Ukrainian administration that took over in the wake of political upheaval in late 2013 said the economy was left in shambles by former President Viktor Yanukovych. More than a year later, the IMF said real gross domestic product is expected to contract by 5.5 percent.
Gripped by conflict and interference by its former Soviet patrons, the IMF nonetheless said some of the onus lies with Kiev.
"Addressing deep-rooted structural problems is critical to create an enabling environment for investment and private sector activity," acting IMF Chairman David Lipton said in a Wednesday statement.
That sentiment was backed earlier this week by Victoria Nuland, assistant U.S. secretary of state for European affairs, who told lawmakers in Washington the leaders in Ukraine were "in a race against time" to enact the reforms necessary to reboot the nation's economy.
For the IMF, addressing reforms in an energy sector plagued by debt and pressured by its Russian counterparts is paramount for success. Lipton said Ukrainian authorities plan to eliminate the debt carried by state-controlled energy company Naftogaz by 2017 in part by fundamentally restructuring the company.
The performance of Ukraine's energy sector is a vital concern for a European market as 20 percent of the Russian natural gas headed west runs through the Soviet-era pipeline network in Ukraine. Trilateral talks to discuss gas-related dates may take place as early as next week.
The IMF said Ukraine's economy is expected to return to growth as early as next year, when real GDP is expected to grow by 2 percent.
