Ukraine agrees with the IMF on a four-year loan program worth $8.1 billion
Photo: Ministry of Finance of Ukraine

Ukraine and the International Monetary Fund have agreed on a new four-year, $8.1 billion Extended Fund Facility (EFF), according to the IMF, Ministry of Finance and NBU.

The agreement has so far been reached at the technical level (Staff Level Agreement) and is to be approved by the Fund's Board of Directors in the coming weeks after the state budget is adopted and adequate financial guarantees are received from other Ukrainian donors.

"The program is expected to help attract large-scale external support to cover Ukraine's financial needs. In the baseline scenario, the total financing gap for 2026-2029 is estimated at about $136.5 billion," said IMF Mission Chief Gavin Gray.

The new IMF program will replace the current $15.6 billion program, under which Ukraine has undergone eight successful reviews and received nine tranches.

The IMF said that, in addition to adopting the budget, Ukraine has committed to avoiding inefficient spending and introducing new tax privileges.

The authorities are also going to expand the tax base by taxation of income from digital platforms, to close the customs loopholes for importing consumer goods and abolish the exemption from VAT registration. To combat the shadow economy, the draft law provides for increased competition in public procurement and the elimination of loopholes in the Labor Code.

The National Bank of Ukraine has committed to continue its monetary policy aimed at reducing inflation to the target of 5% over a three-year horizon and to provide greater flexibility in the exchange rate.

The IMF emphasized the importance of maintaining independent and adequately funded anti-corruption institutions and continuing to reform the tax and customs services, including the appointment of a new head of the customs service and the introduction of a modern IT infrastructure to improve the efficiency of these agencies.

It is also planned to continue implementing the debt restructuring strategy to restore debt sustainability.

To strengthen state-owned enterprises, the government is committed to reforming their financial planning, reporting, and auditing, as well as improving the procedures for selecting the management of state-owned enterprises and state-owned banks.