IMF announces First Review mission under new EFF program for Ukraine

MOSCOW. May 15 (Interfax) - An International Monetary Fund (IMF) mission will visit Ukraine in the coming weeks for the first review of the new $8.1-billion four-year arrangement under the Extended Fund Facility (EFF), Ukrainian media quoted IMF spokesperson Julie Kozack as saying.

"Of course, staff will hold discussions with the authorities on the status of those reform commitments, including the two that were raised on VAT," media outlets quoted Kozack as saying at a press briefing in Kiev.

As reported, Ukraine pledged under the new program to introduce VAT for entrepreneurs who currently use the simplified taxation system and for imported parcels valued at up to 150 euros. Ukrainian officials said that an agreement was reached with the IMF in mid-April to postpone the introduction of VAT for entrepreneurs using the simplified taxation system for a year. A bill on parcels has been adopted by Ukrainian parliament in the first reading, but its second reading is delayed.

"We are supporting efforts by the authorities to broaden the tax base, including by reducing the size of the informal sector. Right now, the informal sector, for example, is estimated at 45 percent of GDP. So, moving some of that sector out of the shadows into the formal economy, where those enterprises, those firms are contributing to tax revenue, will be very important for Ukraine in addition to some of the other revenue mobilization measures," Kozack said.

As reported, given the protracted crisis, a new four-year EFF program for Ukraine totaling $8.1 billion replaced the previous four-year $15.6 billion program, which was launched in March 2023 and under which the country had received nine tranches totaling $10.6 billion.

The Ukrainian state budget received the first SDR1.11 billion ($1.5 billion) tranche under the new program in early March 2026. This year will see three reviews under the new arrangement scheduled for early June, September and December. If successful, Ukraine will be eligible for two tranches of SDR0.50 billion (around $0.72 billion) each, followed by another SDR0.70 billion (approximately $1.01 billion).

The total amount of external financing for Ukraine from international partners under the new program stands at $136.5 billion under the baseline scenario and at $146.3 billion under the negative scenario.