Ukraine in ‘full-blown financial crisis’ – National Bank head

Valeria Gontareva, the head of Ukraine's Central Bank, attends a news conference in Kiev December 30, 2014 (Reuters / Konstantin Grishin)
Ukraine’s GDP shrank by 7.5 percent from January till November 2014, as foreign exchange reserves fell to their lowest level since 2009, and inflation jumped to 21 percent by November, admits the head of the Ukraine’s National Bank, Valeriya Gontareva.

The country’s foreign exchange reserves shrank to $9.9 billion, as Kiev gave Naftogaz an estimated $8.6 billion to buy gas and settle state guaranteed Eurobonds. $3.1 billion went to settle the debt with Russia’s Gazprom, Gontareva explained.

READ MORE: $300,000 in gold missing from Ukraine Central Bank after swapped for lead bricks

The conflict over Russia’s reunification with Crimea has killed more than 4,700 people has also killed the economy.

“There is a full-blown financial crisis,” Gontareva told reporters Tuesday. “We can only overcome it if we implement quick and even extreme reforms.”

Ukraine’s national currency, the hryvnia, has lost half of its value by November.

“…. There’s almost 100 percent devaluation in the country. From the economic territory, it’s called a 50 percent devaluation,” Gontareva said.

She said it is impossible to keep the hryvnia stable.

“This is simply an unrealistic task, because it’s not fixed in any constitution.”

READ MORE: Ukrainian minister admits country is ‘bankrupt’

Earlier in the week, after the unprecedented 10–hour session the Ukrainian parliament adopted the 2015 budget that sees a number of drastic cuts and import duty raised to 10 percent, which should give way to new IMF funds. The last IMF estimate showed that Ukraine needs another $15 billion, on top of the $17 billion the Fund had already agreed to allocate.