So far, Ukraine is current in its payments on the 2010 loans, but the I.M.F. severely chastised the Ukrainian government for excessive spending while it faced a recession. "Large pension and wage increases, generous energy subsidies and soccer cup spending led to a widening of the combined deficit of the general government and the state-owned company Naftogaz," the organization wrote.
The I.M.F.had demanded serious changes. "Directors recommended the authorities implement a package of comprehensive policy adjustments in several areas, including curtailing the fiscal and external account deficits, phasing out energy subsidies, strengthening the banking sector and improving the external competitiveness of the company," the report said.
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Some of Ukraine's most serious problems appear to be in the energy sector. The discounts on natural gas from Russia, while aiding the Ukrainian government's bottom line, may only worsen the overall challenges of excessive energy use and a distortion of energy subsidies, especially for households.
The I.M.F. strongly urged increases in utility rates, combined with aid to protect impoverished families. "Upfront, meaningful and broad-based tariff increases are essential," its report said.
The I.M.F.said it expected Ukraine to emerge from a recession in 2014, but it also issued a stark warning: "This outlook is subject to significant risks, emanating from the inconsistent policy mix, and heightened political and economic uncertainty in recent weeks."