Ukraine: IMF finds $15B black hole in finances

A further $15 billion may be needed to bailout struggling Ukraine, which seems ever closer to economic disaster.

The International Monetary Fund (IMF) has spotted a shortfall of $15 billion on top of the $17 billion bailout loan package it has worked out for the troubled country, according to reports. This black hole is especially worrisome as the world's economies are facing slower global growth and so the appetite to help out Ukraine may dwindle – especially as the country's economy is such trouble.

Besieged by conflict in some of its most important economic areas and the collapse of exports to Russia, Ukraine's economy is expected to shrink by 7 percent this year, according to its government. Its currency reserves have shrunk, raising concerns that its central bank will not be able to keep propping up the country's currency, the hryvnia. If Ukraine's currency – which has been world's the worst-performing this year -- falls even further, Ukraine could enter the dangerous territory of hyperinflation, where prices rise by more than 50 percent in a month. Inflation already hit 22 percent in November.

"It is not a question of throwing a few billion bucks at the problem, the program financing as is just does not add up and very significantly," Tim Ash, head of emerging markets research at Standard Bank, wrote in a research note. He argued that at least the government and its creditors had realized this in time to ramp up the bailout.

If the bailout were to collapse, it could trigger worse problems for the recently assembled, Western-backed, government led by Prime Minister Arseny Yatseniuk and President Petro Poroshenko. Ukraine has become an important symbol for both Russia and the West, as relationships between them deteriorate to their worst since the Cold War.

On Tuesday, the Ukrainian army accused separatists in the east of Ukraine, where there are ongoing disputes over territory, of violating an agreed day-long ceasefire known as the "Day of Silence." A longer peace is still "a long way off," according to Russian Foreign Minister Sergei Lavrov.

A sigh of relief was breathed when Russia resumed shipments of natural gas to its neighbour – albeit at a much higher cost -- in time to keep households and industry going. Yet it is still unclear how far Russia, where the economy is also in trouble after sanctions imposed by the West, is prepared to go to defend its interests across the Ukrainian border.

- By CNBC's Catherine Boyle.