Dozens of Ukrainian banks have reportedly gone bankrupt over the course of one year, with Kiev having to rely on external funding from the European Union (EU) amid insufficient insurance funds.

Managing Director of the Ukrainian Deposit Insurance Fund Konstantin Woruschilin said 46 banks in the country have declared insolvency, pointing to a number of contributing factors to the high number of bankruptcy, Russia-based Sputnik news agency reported on Saturday.

Woruschilin said the main factor is “the immoral behavior of bank managers,” with a number of cases involving bank employees stealing money for personal purposes.

Other factors were a drop in the country’s exports, a decline in consumption and high production costs, according to the director.

The Deposit Insurance Fund, which is a government institution, will reportedly not be able to reimburse the bank customers for their losses as its financial resources are insufficient.

The government institution will have to rely on external funding from Brussels in order to meet its obligations.

This comes at a time when Ukraine is struggling with financial problems. Last year, the country’s economy shrank by 7.5 percent as inflation soared, making it the worst economic year for Ukraine in over seven decades.

The headquarters of Ukraine’s Central Bank in Kiev (file photo)

Ukraine’s central bank has forecast that the country’s economy will continue to contract by up to five additional percentage points this year and the inflation is predicted to stand at 18 percent.

The country’s currency, hryvnia, also fell almost 50 percent against the US dollar in 2014. Data released in February showed the hryvnia plunged by another 40 percent in value this year.

On Friday, global ratings agency Standard and Poor’s (S&P) downgraded Ukraine’s credit rating by one notch from CCC- to CC due to the country’s intentions to restructure its foreign debt.

The eastern European nation, which has been the scene of deadly clashes between its army and militant forces in the east for almost a year, had a month-on-month inflation of 5.3 percent in February and 3.1 percent in January 2015.

A fragile deal between the Kiev government and militants signed in February almost ended the tensions. However, the country is left in the hands of a combination of monetary, budgetary, industrial, banking and energy crises that could make Kiev reliant on outside help for years.

CAH/MKA/HMV