Ukraine has reached an agreement with the International Monetary Fund (IMF) for the first review of its extended funding program, which will provide Kyiv with $690 million pending approval from the Fund’s board.
As part of this international cooperation initiative, Ukraine is required to implement a series of tax, energy, and anti-corruption reforms to meet its structural commitments. These measures aim to enhance budget revenue, improve government efficiency, and liberalize key economic sectors.
In the fiscal area, Ukraine must control budget expenditures while increasing domestic revenue through optimizing tax administration and identifying potential savings. A significant step includes the removal of VAT exemptions on international shipments, intended to reduce tax loophole usage and limit non-essential imports.
Additionally, the country plans to strengthen its efforts against international tax evasion, particularly through transfer pricing and tax arbitration schemes among companies. Reforms are also set to address the simplified taxation system to prevent abuses, such as artificial business fragmentation and misclassification of labor relations with individual entrepreneurs.
Moreover, the modernization of tax administration will focus on a risk-oriented approach, which aims to lessen the burden on compliant taxpayers and enhance control efficiency. Institutional changes are also planned for the Bureau of Economic Security and the State Customs Service to bolster tax compliance efforts.
In the energy sector, a roadmap for gradually transitioning to market-based tariffs is being prepared, moving away from the current system of special obligations that limit the profitability of state energy companies. This reform will be accompanied by mechanisms for targeted social support for vulnerable households to mitigate the impacts of rising tariffs.
Furthermore, the independence and institutional capacity of the National Commission for State Regulation in the Spheres of Energy and Utilities (NERC) will be strengthened.
On the anti-corruption front, the focus will be on further enhancing the electronic asset declaration system using a risk-based approach for audits. A separate section addresses the reform of corporate governance in state enterprises and banks, emphasizing the acceleration of transparent leadership selection processes, the role of independent supervisory boards, and increasing accountability for management.
As part of the agreed timeline, Ukraine is expected to fulfill additional political commitments and catch up on reforms that were scheduled for the first quarter but were either delayed or not implemented.
Ukraine has secured a $690 million loan from the IMF after agreeing to implement critical reforms in tax, energy, and anti-corruption sectors. The country must adhere to a structured timeline to meet its commitments and enhance economic stability.