The International Monetary Fund urges Ukraine to stop subsidizing electricity and heating tariffs to ensure a fairer distribution of the tax burden and improve the fiscal situation. IMF Managing Director Kristalina Georgieva made these recommendations during a discussion at the World Economic Forum in Davos.
This is reported by Finway
Growth Prospects and the Need for Reforms
Kristalina Georgieva emphasized that Ukraine has significant potential for accelerated economic development and could become the “economic lion of Europe” if reforms continue. She noted that to achieve this, it is necessary to remove barriers to the development of the private sector, ensure a fair distribution of the tax burden, and improve the security situation and access to the workforce.
“Electricity and heating are still subsidized… We know why the country is doing this, but it needs to be eliminated. There are still fiscal issues to address. We are currently considering how to make the distribution of the tax burden fairer. It’s not easy, but it needs to be done,” she said.
Challenges for the Economy and the Role of the IMF
Georgieva pointed out the challenges facing the Ukrainian economy, particularly regarding access to the workforce, which is even more important for some businesses than security risks. She emphasized the IMF’s support in addressing these issues, including the return of Ukrainians home, overcoming structural unemployment, and integrating veterans into society.
Additionally, the IMF Managing Director highlighted the importance of completing Ukraine’s accession process to the European Union in a timely manner, which would serve as an additional incentive for the country’s full integration into the European economic space. According to her, this is a “magnet for the Ukrainian economy.”
Georgieva also noted that Ukraine has demonstrated significant progress in implementing reforms during the war. In particular, within the framework of the four-year extended funding program that started in the spring of 2023, eight reviews have already been successfully completed.