The International Monetary Fund (IMF) and Ukrainian authorities have reached a staff-level agreement on the first review of the four-year Extended Fund Facility (EFF) program. As reported on the official IMF website, upon the approval of the Fund’s Executive Board, Ukraine will gain access to the second tranche of approximately $690 million. This financial injection is vital for maintaining macro-financial stability amidst the ongoing war.
The agreement was reached despite some delays in Ukraine’s adherence to the agreed roadmap. Specifically, two structural benchmarks for the first quarter were met with delays, while one was missed entirely. Gavin Gray, the IMF mission chief, pointed out that the pace of structural reforms in Ukraine has slowed. Consequently, the Fund decided to offset these deviations through new, concrete policy commitments pledged by the Ukrainian government.
With defense and reconstruction expenditures remaining exceptionally high, the IMF is urging Ukraine to mobilize more domestic revenues. The primary strategy outlined by the Fund involves curbing the shadow economy. Key measures demanded by Gray include the cancellation of tax exemptions on international postal packages, tighter control over transfer pricing, and a comprehensive overhaul of the simplified tax system. The latter aims to prevent artificial business fragmentation, tax evasion, and disguised employment.
Energy sector restructuring is another major pillar of the IMF’s requirements. The Fund emphasizes that the current system of subsidized tariffs for households and Public Service Obligations (PSO) severely undermines the financial health of state energy companies. The IMF and Kyiv are currently preparing a roadmap for gradual energy market liberalization, which will eventually lead to higher utility tariffs for the public, accompanied by robust social safety nets for vulnerable households.
Furthermore, the IMF stressed the urgency of reforming state-owned enterprises (SOEs) and state banks, calling for transparent management selection processes, stronger supervisory boards, and a reliable asset declaration system. Strengthening the integrity and independence of regulatory and law enforcement bodies, particularly the State Customs Service and the Bureau of Economic Security (ESBU), remains essential to combat tax evasion and ensure the transparent use of international aid.