In the coming weeks, representatives from the International Monetary Fund (IMF) will visit Ukraine to evaluate the country’s progress in implementing economic reforms and expanding its tax base as part of an $8.1 billion loan agreement.
According to IMF spokesperson Julie Kozak, it is crucial for Ukraine to enhance its domestic financing to address its “very, very significant” financial requirements, in addition to the substantial external assistance it has received from international donors since the onset of Russia’s full-scale invasion in February 2022.
Kozak emphasized the need for the Ukrainian government to broaden the country’s tax base and to formalize a portion of the shadow economy, which is estimated to account for approximately 45% of the nation’s gross domestic product (GDP). This move is seen as essential for improving fiscal stability.
Discussions during the IMF’s visit will also include potential tax reforms, such as the introduction of value-added tax (VAT) on low-cost imports and a tax for self-employed individuals. These changes are aimed at increasing government revenue and ensuring a more sustainable economic framework.
The IMF has underscored that the reforms outlined in the loan program are not only vital for securing funding but also for advancing Ukraine’s aspirations for European Union membership.
Prior to this, Ukraine and the IMF have been in discussions about alternatives to the VAT for individual entrepreneurs to bolster the budget for the upcoming year.
The IMF is set to assess Ukraine's economic reforms and tax initiatives as the country seeks to strengthen its financial position amidst ongoing challenges. The visit underscores the importance of domestic financing and reform implementation for both economic stability and EU integration.