In a report today, the bank projects that the country’s GDP will contract by 12% this year.

Beleaguered Ukraine faces economic challenges and fiscal instability, while on-going conflict in the east has made stabilisation more difficult. Coupled with an unfavourable global economic environment, there has been a sharp contraction in the economy.

However, the World Bank’s Ukraine macroeconomic update projects that if reforms continue a gradual recovery of 1% is possible in 2016 driven by net exports, capital investment and privatisation.

“The Ukrainian authorities have taken many important steps to stabilise and reform the economy, but they represent only a meaningful start of the long and arduous reform process,” said Qimiao Fan, World Bank country director for Belarus, Moldova and Ukraine.

“Continued and faster reforms will help lay the foundation for future growth and they are crucial for Ukraine’s survival.”

The bank admitted that even with a low GDP in 2015, the country’s general fiscal and budget performance was better-than-expected, however, risks confronting Ukraine remain high.

The report said: “To guard against these risks, it is very important that authorities continue with flexible exchange rate regime and prudent fiscal policy. They need to redouble efforts at fighting corruption and improving governance.”

“They need to continue reforms to reduce Naftogaz imbalances and strengthen the energy sector’s capacity. In addition, the authorities need to boost confidence in the banking system.”

In the last 18 months, the government of Ukraine accepted more than $4.1bn in budget support, investments and private sector financing from the World Bank.

Additionally, the World Bank’s current investment project portfolio in the Eastern European country has reached $2.7bn, through nine projects, to support the improvement of basic public services and utilities.