The International Monetary Fund (IMF) has expressed concern regarding the implementation of several budget initiatives in Ukraine that could negatively impact the country’s financial stability. In particular, this includes tax benefits for individual entrepreneurs (FOP) and industrial enterprises, as well as the idea of making train travel free for citizens. Discussions on these measures are taking place in the context of the start of negotiations for a new four-year IMF loan package amounting to $8 billion.
This is reported by Finway
Key IMF Demands to Kyiv
Fund experts emphasize that the proposed budget initiatives pose risks to Ukraine’s already vulnerable fiscal position, which is under pressure due to the war. As part of the negotiations, the IMF has put forward a number of key demands:
- Liberalization of the gas market. Ukraine must gradually abandon the provision of preferential price discounts for gas consumers to ensure market conditions.
- De-shadowing the economy. The Fund places special emphasis on abolishing tax benefits for FOP, as currently about 30% of Ukraine’s GDP is in the shadow economy.
- Devaluation of the hryvnia. The IMF continues to insist on accelerating the process of devaluation of the national currency to increase budget revenues in hryvnia.
Prospects for a New Cooperation Program
According to the IMF, the new program with Ukraine will focus on implementing measures to support macroeconomic stability, increasing domestic revenues, ensuring the sustainability of public debt, and maintaining the external viability of the economy.
“Measures to support macroeconomic stability, mobilize domestic revenues, ensure the sustainability of Ukraine’s debt, and maintain external viability.”
The Ukrainian side had hoped for the approval of the new IMF loan program by the end of 2025. However, the timeline may now shift to January 2026. The main obstacle remains the Fund’s requirement: first, the European Union must approve a plan to use the frozen assets of the Central Bank of Russia to secure reparations for Ukraine. A decision on this issue is expected in December. In the event of a negative voting outcome, all further funding for Ukraine from the IMF could be at risk.