KIEV: The World Bank kept its forecasts for Ukraine's economy unchanged on Thursday, seeing growth of 1 percent in 2016 and 2 percent in 2017, but warned that a sustainable recovery hinged on a commitment to root out corruption and improve governance.
Ukraine has suffered two years of recession partly due to a costly conflict with pro-Russian separatists. Its Western-backed leaders have pledged to implement sweeping reforms in exchange for a $40 billion aid package.
"In addition to some noteworthy reforms implemented in recent months, deeper structural reforms to bolster investor confidence and productivity are needed to raise economic growth to 3-4 percent in the medium term," said Satu Kahkonen, World Bank Country Director for Belarus, Moldova and Ukraine.
Patchy reform progress, including on promised tax and pension changes, and signs that vested interests continue to influence policy have raised concerns among Ukraine's foreign creditors about the authorities' commitment to change.
"Tackling corruption and improving governance are central priorities on the road toward sustained recovery and shared prosperity for the population," the World Bank said.
It said expanding the tax base, reforming the pension system and improving transparency in the private sector were some of the key reforms needed to safeguard economic stability.
The World Bank has given Ukraine $4.4 billion in loans since May 2014, after a pro-Western uprising swept a Moscow-backed president from power and set the country on a path towards greater integration with Europe.
The bank could approve a $500 million loan to Ukrainian state energy firm Naftogaz for winter gas purchases "very soon", although the date has not yet been determined, Kahkonen said.
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