KIEV, Ukraine — The Merefa Glass factory, which has manufactured bottles and jars in Ukraine since 1896 and employed more than 2,000 people, has suspended operations because its main furnace is broken and it can no longer get a crucial raw material from a supplier in Crimea that is now cut off by sanctions.
Thousands of workers at Yuzhmash, a once proud manufacturer of missiles, rockets and other high-tech machinery, are now on furlough as business with Russia — until last year the company’s main customer — has vaporized.
Creditors have moved to oust the management of Mriya Agro Holding, one of Ukraine’s largest agricultural producers, after the company failed to keep up with payments on about $1 billion in debt.
Even if a cease-fire agreement reached on Thursday succeeds in ending the war in eastern Ukraine with Russian-backed separatists, the pro-Western government in Kiev still faces a monumental challenge in building a viable state.
Burdened by the costs and chaos of war, and a post-Soviet history of mismanagement and corruption by officials in Kiev, Ukraine’s economy is disintegrating faster than Western aid can shore it up. Across the country, from the war-torn east to the Europe-focused west, factories, banks and other businesses are collapsing, putting thousands out of work.
A $17.5 billion lifeline extended last week by the International Monetary Fund still falls far short of the more than $40 billion financing gap that experts say the country faces over the next four years. And that does not include money to rebuild or replace Ukraine’s dilapidated mines and obsolete industries once sustained by contracts with Russia or kept alive by subsidies Kiev can no longer afford to pay.
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At a meeting with members of the Ukrainian Parliament last week, a senior official from the European Bank for Reconstruction and Development not only described Ukraine’s banking system as being in disastrous shape, but cited the urgent need for a continuing overhaul of the notoriously corrupt natural-gas sector in Ukraine, as well as for judicial reforms.
“Private sector investors, a lot of them, live in fear,” the official, Francis Malige, told the lawmakers. “They live in fear that when they have achieved something, that something will be taken away by a corporate raider.”
The country’s new finance minister, Natalie Jaresko, a Ukrainian-American, has been negotiating with the I.M.F. and urging international creditors to view Ukraine as a long-term investment.
“I don’t think the war is the true reason our international partners are coming to the table,” she said in a recent interview. “They are not financing the war. They are financing a reform program and a group of committed leaders in every branch of government that have an incredible opportunity right now to make this change, and to make Ukraine a healthy, robust and prosperous, inviting economy.”
Daniel Rzhenetskyy contributed reporting in Kiev.
