The International Monetary Fund has expressed concern regarding some new budget initiatives proposed by the Ukrainian authorities. In particular, these include tax incentives for individual entrepreneurs (IEs) and the industrial sector, as well as the possibility of introducing free railway travel. Such measures, according to the IMF, could pose additional risks to Ukraine’s fiscal sustainability, which is already under significant pressure due to the war.
This is reported by Business • Media
Key IMF Demands in Negotiations
- Liberalization of the Gas Market. Ukraine may face a demand to abandon preferential pricing policies for consumers, which would make the energy resources market more competitive.
- De-shadowing the Economy. The IMF pays particular attention to eliminating tax incentives for IEs, as it is estimated that about 30% of the country’s GDP is currently in the shadow economy.
- Devaluation of the Hryvnia. The Fund continues to insist on the need for a faster devaluation of the national currency, which it believes would contribute to an increase in budget revenues in hryvnia terms.
Obstacles to Signing a New Program
Ukraine had hoped to receive approval for a new four-year IMF credit package worth $8 billion by the end of 2025. However, these timelines may now shift to January 2026. A key condition for receiving the funds is the prior approval by the European Union of a plan to use frozen assets of the Central Bank of the Russian Federation to guarantee reparations loans. A decision on this matter is expected to be made in December. If the vote fails, it could jeopardize future funding from the IMF.
The IMF stated that the new program will focus on “measures to support macroeconomic stability, mobilize domestic revenues, ensure Ukraine’s debt sustainability, and maintain external viability.”