By Natalya Zinets
KIEV, Sept 17 (Reuters) - Ukrainian President Viktor Yushchenko said on Thursday he was disappointed with the lenience international financial institutions have shown the government of his rival, Prime Minister Yulia Tymoshenko.
Yushchenko accused his former ally during the pro-Western Orange Revolution of populism, uncontrollable spending and failure of carrying out structural reforms vital for future economic growth in the ex-Soviet State.
Ukraine, its economy deeply affected by the global financial crisis, is surviving on a $16.4 billion lifeline from the International Monetary Fund. The IMF has attached conditions for the funds, but has softened some of them in the past year.
"Populism and politicising have replaced the reforms that Ukraine should have carried out under the supervision of international financial institutions," Yushchenko told a forum of academics and analysts debating Ukraine's economic situation.
Both he and Tymoshenko are expected to run in a presidential election on Jan. 17, though Yushchenko has little chance of re-election with support at just 3-4 percentage points.
Ukraine agreed on a programme with the IMF last November and the fund carries out quarterly studies to assess the economic crisis and whether Kiev is fulfilling its conditions.
Those include monetary issues such as foreign currency reserve floors and monetary base limits, as well as measures to shore up banks shaken by a much-weakened national currency. Longer-term reforms include raising gas prices to help the finances of state energy firm Naftogaz, which buys Russian gas at more than it sells on to domestic consumers, and letting the hryvnia currency float freely. The government has done neither.
"I am very disappointed by the fact that the policies in 2009 departed so far from the memorandum (of understanding with the IMF)," Yushchenko said.
"Neither the World Bank nor the International Monetary Fund did the work that had been foreseen ... -- to shift the government towards reforms," he said.
CRISIS NOT OVER
The World Bank's regional chief, Martin Raiser, told the forum the bank had an economic growth forecast of 1.5 percent for Ukraine next year -- compared to a prediction of 1.0 percent made by the bank in July.
But Raiser emphasised there were few positive signs that would convince the bank to improve that forecast further despite monthly growth in industrial product, include steel output -- vital for Ukraine's economy.
"The month-on-month figures are very volatile. And although the global economy is stabilising, in Ukraine we need to see a more solid development in the second half before we can say that the crisis has ended," Raiser said.
The IMF has a 3 percent economic growth forecast for next year. Both institutions see Ukraine's economy shrinking 14-15 percent this year. Gross domestic product (GDP) fell 20.3 percent in the first quarter and 18 percent in the second. (Writing by Sabina Zawadzki; editing by Patrick Graham)