IMF staff and Ukraine reach agreement on $690 million aid disbursement

The International Monetary Fund (IMF) and Ukraine have reached a staff-level agreement on the first review of Kyiv's four-year Extended Fund Facility (EFF) program, a development that could unlock approximately $690 million in additional funding. If approved by the IMF Executive Board, this disbursement would bring the total funding provided under the program to roughly $2.2 billion.

IMF mission chief Gavin Gray stated that Ukraine met all quantitative performance criteria and indicative targets through the end of March. However, progress on some structural reforms has been delayed, with two benchmarks implemented later than planned and one missed entirely. The IMF and Ukrainian officials have agreed on a revised reform timetable, corrective measures, and additional policy commitments to ensure the program remains on track.

The IMF acknowledged that Ukraine has maintained macroeconomic stability despite Russia's ongoing war, supported by international assistance and domestic economic policies. The National Bank of Ukraine has been credited with preserving financial stability, maintaining adequate reserves, and keeping inflation expectations under control.

Despite these positive steps, the IMF cautioned that risks remain exceptionally high. Ukraine's economic growth is projected to slow to between 1% and 1.6% in 2026 due to the continued impact of the war and broader geopolitical disruptions. The fund emphasized the necessity of continued fiscal discipline and reforms aimed at increasing state revenues. Proposed measures include removing VAT exemptions on imported parcels, strengthening enforcement against tax avoidance, reforming the simplified tax regime, and reducing the size of Ukraine's informal economy.

Furthermore, the IMF called for renewed anti-corruption efforts, enhanced governance of state-owned enterprises, and gradual reforms in the energy sector, including a roadmap toward market liberalization and future adjustments to household utility tariffs. This agreement follows recent legislative actions by Ukraine's parliament, including the approval of a bill taxing income earned through digital platforms, which aligns with IMF and EU reform commitments. However, several other IMF- and EU-backed bills are still pending in parliament.