The International Monetary Fund (IMF) has approved a new four-year funding program for Ukraine, amounting to $8.1 billion. The financial support will be disbursed in tranches contingent upon Ukraine meeting specific conditions outlined by the IMF.
To access the funds, Ukraine is required to implement a series of structural benchmarks by the end of March 2026. These benchmarks include various legislative changes aimed at increasing tax revenues and improving fiscal stability.
Among the proposed tax reforms, the government plans to introduce a tax on income derived from digital platforms, often referred to as the “OLX tax.” Additionally, there will be a new taxation framework for international parcels, irrespective of their value. A significant change will involve the introduction of a Value Added Tax (VAT) for sole proprietors with annual revenues exceeding 4 million hryvnias, effective January 1, 2027.
The government has also committed to abolishing the current military tax rate of 5%, extending its application into the post-war period, and integrating it with income tax. Measures to reduce corporate tax evasion and eliminate tax privileges for foreign companies are also part of the plan.
Furthermore, the standard VAT rate, currently set at 20%, may be increased if budget revenues decline. The government has expressed readiness to raise taxes as necessary, viewing an increase in the VAT rate as a viable option in uncertain economic conditions.
Utility tariffs are also expected to rise, aligning with market rates once the conflict with Russia concludes. The government is tasked with ensuring support for vulnerable households during this transition.
The roadmap for gradually increasing tariffs on gas and electricity must be approved by the Cabinet by June 2026. Adjustments to electricity tariffs will be made alongside a review of subsidies aimed at protecting low-income households.
In a move to reduce state ownership in the banking sector, Ukraine plans to sell two state-owned banks, Sense Bank and Ukrgasbank. An internationally recognized financial consultant is to be appointed for these banks by the end of March, although a timeline for the sale has not yet been established.
The government will also continue efforts to reduce external debt through restructuring agreements with creditors. Notably, the IMF will be prioritized as a creditor, meaning that debts owed to the IMF will not be restructured or written off and must be repaid first.
Anti-corruption measures remain a focal point, with the IMF emphasizing the importance of maintaining the independence of Ukraine’s anti-corruption agencies. Recent scandals have raised concerns regarding the effectiveness of anti-corruption efforts and the management of state enterprises.
Monetary policy is expected to maintain a strengthening trend to achieve the National Bank of Ukraine’s inflation target of 5%. As uncertainty diminishes, the National Bank aims to transition to a full inflation-targeting regime with a flexible exchange rate.
The IMF’s program is based on a baseline scenario anticipating the end of the war by 2026. Adjustments will be made if peace negotiations yield positive results. Conversely, a negative scenario considers the possibility of an escalation of the conflict in 2026, extending into 2027, and a frozen conflict lasting until the end of 2028.
The IMF has approved an $8.1 billion funding program for Ukraine, contingent on the implementation of specific tax reforms and structural benchmarks. Key measures include tax increases and utility tariff adjustments, aimed at stabilizing the economy amid ongoing conflict.