An IMF mission is scheduled to arrive in Ukraine in the coming weeks to conduct the first review of the $8.1 billion Extended Fund Facility (EFF) program, as reported by Interfax-Ukraine. IMF spokesperson Julie Kozack confirmed that the discussions will center on the implementation of reform commitments, with a particular focus on fiscal and tax measures.
The mission intends to review progress on critical structural benchmarks, including the introduction of VAT for simplified tax system participants and the taxation of cross-border parcels valued under $150. While the Ukrainian parliament has initiated legislative processes to address these requirements, progress has been slower than originally anticipated. These tax reforms are seen as essential for broadening the national revenue base and stabilizing the budget amid the ongoing war.
A significant portion of the talks will be dedicated to the issue of economic shadow sectors. The IMF estimates that the informal economy in Ukraine accounts for approximately 45% of GDP. Enhancing tax collection and reducing the shadow economy are viewed as vital components for strengthening Ukraine’s fiscal autonomy and ensuring that the state can cover its mounting expenditure needs. The IMF’s support remains tied to these rigorous reform efforts, which are also aligned with Ukraine’s long-term integration into the European Union.
The new $8.1 billion EFF program, approved in February, serves as a pillar for Ukraine’s financial stability. In the baseline scenario, the program is expected to facilitate external financing for Ukraine totaling $136.5 billion, with potentially higher figures in less favorable economic forecasts. Since the beginning of the war, the nature of these financial packages has evolved to focus on sustaining essential government functions under extreme duress.
As Ukraine continues to navigate these complex economic challenges, its cooperation with the IMF remains a central element of its international financial strategy. With the country currently ranking as the second-largest debtor to the IMF globally, following Argentina, the upcoming review is crucial for maintaining donor confidence and ensuring the continued flow of necessary tranches to support the nation’s financial resilience.