Growth will probably slow this year in Eastern Europe and central Asia, and the region is at risk from tighter credit conditions at a time when lending by the International Monetary Fund may be postponed to countries such as Ukraine, a World Bank official said.

The bank is forecasting growth of 3.5 percent in Russia this year, down from 4 percent last year, said Philippe Le Houerou, a World Bank vice president for the region. Ukraine and Belarus will expand 2.5 percent and 3 percent this year, slower than 5.2 percent and 5.3 percent in 2011, he said.

The IMF won’t release new funds to Ukraine until the country raises household utility tariffs to balance the budget, Le Houerou suggested, adding that the country may consider devaluing its currency, the hryvnia, in an attempt to make exports cheaper.

“Devaluation can be used to recook some competitiveness,” Le Houerou said at a press conference in Washington. “It’s not a taboo issue at all. This is one of the instruments.”

Ukraine agreed on a second $15.6 billion rescue package with the IMF in 2010, following a $16.4 billion bailout loan in 2008. The lending has been frozen since last March after the government failed to raise household utility tariffs. The country is also in talks with the IMF to postpone an outstanding 2012 repayment of about $3 billion to the IMF for 10 years.

“There is an issue with the IMF lending” to Ukraine, Le Houerou said. “The government has not done reforms, particularly reform of domestic energy prices.”

“The structural side of the program is not moving forward, but we believe it will eventually,” Le Houerou added. “Some energy prices have been subsidized by the government and this is not good for energy efficiency.”

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