UPDATE 1-Ukraine sees 3 pct growth in 2014 after Russia aid package

Thursday, 19 Dec 2013 | 3:38 AM ET

KIEV, Dec 19 (Reuters) - Ukraine's 2014 budget sees economic growth at 3 percent year-on-year, a draft document showed on Thursday, after Kiev said a $15 billion aid package from Moscow would help revive its ailing economy that has shrunk for the past five consecutive quarters.

The government budget proposal comes after Kiev on Tuesday struck a deal with Russia envisaging cheaper gas supplies and $15 billion in bond purchases in a bid to push back the risk of defaulting on its debt.

Ukraine's parliament was due on Thursday to consider the draft document, which also envisages state spending at 447 billion hryvnias ($55.9 billion), revenue at 392 billion hryvnia and a central government budget deficit at 3.6 percent of GDP.

Kiev needs money to cover an external funding gap of $17 billion in 2014 - almost the level of the central bank's depleted currency reserves - and has won some immediate breathing space in handling its economy with the Moscow bailout.

Ukrainian Prime Minister Mykola Azarov on Wedneday hailed the aid from Moscow as a "historic development" and vowed reforms to modernise the ex-Soviet economy.

Ukraine's economy grew by 0.2 percent in the whole of 2012. The government has forecast economic expansion of at least 2.5 percent in 2013 but analysts expect contraction of some 0.5 percent after three quarters of negative readings.

The 2014 budget proposal by the government compares to a 2013 revenue plan of 370.6 billion hryvnias and spending at 419.8 billion.