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Ukraine Economic Growth Forecast

May 10, 1998

KIEV, Ukraine (AP) _ Ukraine’s economy will grow in 1998 for the first time since the country gained independence from the Soviet Union, a senior official said Sunday.

Ukraine’s gross domestic product has fallen every year since the Soviet Union collapsed in 1991, including last year when it dropped by 3.2 percent. At the end of last year, GDP had declined by 63 percent since 1989.

``The economic collapse has reached bottom,″ Vice Prime Minister Sergiy Tigipko told investors during the annual meeting of the European Bank for Reconstruction and Development. ``We expect up to 1 percent growth in 1998.″

Tigipko also said that Ukraine’s foreign debt _ estimated at $10.2 billion _ is ``not that high, and under control.″

Ukraine has come under criticism for the high interest rates it has been prepared to pay to borrow foreign money to cover the debt. The International Monetary Fund suspended its loans to the country in March, partly because of the foreign borrowing.

The U.S. Treasury’s Assistant Secretary for International Affairs, David Lipton, accused Ukraine’s government policy of being ``hostile to the private sector.″

``Comprehensive fiscal and structural reform are urgently needed,″ Lipton told the EBRD meeting. ``We would encourage the government to act positively to implement policy arrangements that can be supported by the IMF.″

An IMF delegation is scheduled to return to Ukraine in June, and Tigipko said he hopes agreement on a new loan of about $2.5 million can be reached then.

``We are aware that it is time to take radical steps to cut the budget deficit, reduce expenditure, cut perks and privileges, and reduce the numbers of those working in the spending ministries,″ he said.

Tigipko also said that inflation will be about 12 percent in 1998, up from 10 percent in 1997.

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