The International Monetary Fund (IMF) on Friday downgraded its projection for Ukraine's economic growth in 2014 to 1 percent, citing worsening financial conditions in eastern Europe.
"The current macroeconomic policy mix has generated large external and fiscal imbalances and has contributed to deepening the recession," the IMF said in a press statement.
The Washington-based lender had previously forecast a 1.5 percent growth for the former Soviet republic in the coming year.
The IMF listed the overvalued exchange rate, inefficiency of the energy sector, weak demand for Ukrainian exports and falling investments as the main reasons for the outlook downgrade.
The global lender also revised the country's GDP (gross domestic product) projection for 2013, saying that the former Soviet economy will contract by 0.3 percent this year against a 0.4 percent growth estimated earlier.
Ukraine's economy, which plunged into recession in mid-2012, risks a default next year.
Russia has agreed to buy 15 billion U.S. dollars of Ukraine's government bonds and offered a sharp discount on Russian natural gas for Ukrainian customers./.