Until 1999, Ukraine stood out as the only postcommunist country that had failed to achieve a single year of economic growth for a whole decade, and it had suffered the greatest registered cumulative decline of all postcommunist countries not been involved in war. The latter might have been a statistical error, but the absence of economic growth was for real (Aslund, 2001a). Ukraine had a particularly large unregistered economy (Johnson et al., 1997).
Most features of economic malaise were apparent. Market reforms had generally been tardy and half-done. The budget deficit remained larger than the available financing, persistently becoming slightly bigger than planned. Nonpayments and arrears were notorious, and barter rose till 1998. While the foreign debt was not very large, much of it was caused by nonpayments, especially for gas imported from Russia, and Ukraine lingered on the verge of default from 1998 with currency reserves usually covering less than one month of imports. Its export performance remained poor. The IMF concluded repeated programs with Ukraine, but the government invariably violated them, prompting the IMF to stop disbursements. The social situation was meager, with income differentiation approaching Latin American heights (Aslund, 2000; Milanovic, 1998).
