The Board of Directors of the International Monetary Fund has approved a new Extended Fund Facility (EFF) program for Ukraine amounting to $8.1 billion. The program is designed for four years and is expected to serve as a catalyst for attracting additional concessional support from international partners and donors.
This is reported by Finway
Significance of the Program for Ukraine’s Economy
As noted in the IMF’s decision, the approved program aims to strengthen Ukraine’s macro-financial stability, address balance of payments issues, ensure the country’s medium-term external viability, and promote the recovery of public debt sustainability in the long term.
“The approval of the Extended Fund Facility (EFF) program is expected to mobilize substantial concessional financing from international donors and Ukraine’s partners, which will help address Ukraine’s balance of payments problem, achieve medium-term external viability, and restore debt sustainability on a forward-looking basis,” the IMF stated in its announcement regarding this decision.
Next Steps and Support for Reforms
Prime Minister Yulia Svyrydenko announced that Ukraine will soon receive the first tranche of approximately $1.5 billion. These funds will be directed towards financing Ukraine’s state budget deficit and supporting macro-financial stability.
Svyrydenko emphasized that the IMF program is integrated into a broader financial strategy for Ukraine. Overall, it is anticipated that the projected budget deficit of $136.5 billion will be covered over the next four years. The program also includes the continuation of reforms that have previously contributed to the stability of the Ukrainian economy.
The IMF’s decision paves the way for further financing from the European Union, G7 countries, and international financial institutions. Additionally, it is expected to reduce debt payments on official obligations through the implementation of debt relief mechanisms.
In February, Yulia Svyrydenko noted that the IMF had simplified previously reached agreements with Ukraine that were established in November. In particular, after numerous consultations, including discussions with Managing Director Kristalina Georgieva, the fund revised earlier measures and structural benchmarks.
Regarding the taxation of individual entrepreneurs (FOPs), Ukraine and the IMF agreed to raise the threshold for VAT implementation to 4 million hryvnias — this level is the highest among European countries. According to the Prime Minister, there are currently 257,000 FOPs in the country with incomes exceeding 4 million hryvnias, so these changes will affect two-thirds of all entrepreneurs.
Previously, the introduction of this norm was considered for January 1, 2027; however, the timeline for the changes to take effect has not yet been finalized.