The International Monetary Fund (IMF) agreed to grant Ukraine access to an additional $1.1 billion in aid after a team visited Kyiv for the fifth review of the organization's $15.6 billion, four-year program with the war-torn country.
The package, under an Extended Fund Facility (EFF) arrangement, "continues to provide a strong anchor for the authorities’ economic program in times of exceptionally high uncertainty," said Gavin Gray, the head of the IMF's mission to Ukraine. The country's "performance under the program has remained strong despite the war."
Ukraine's government met all quantitative performance criteria established at the end of June as well as the structural benchmark for the review, the IMF said in a communique. The organization has also reached an "understanding" with the government on coming policies and reforms to support macroeconomic stability.
"Skillful policymaking, the adaptability of households and firms, and robust external financing has helped support macroeconomic and financial stability," the IMF said.
Ukraine has already received five tranches totaling $7.6 billion under the current IMF agreement, which was approved in March of last year. The last tranche, of $2.2 billion, arrived at the end of June.
The IMF, however, warned that Ukraine faces an economic slowdown in the second half of the year as Russian forces repeatedly target the power grid with missile and drone attacks.
It also reiterated its stance that Ukraine must raise taxes, a measure which has created intense debate in parliament and has sparked loud protest among domestic and foreign businesses in the country.
“Tax revenues need to increase in 2025 and beyond to create space for critical spending, to preserve essential buffers and restore fiscal sustainability," the IMF said. "Achieving this will require the implementation of permanent tax policy measures and relentless efforts to close existing opportunities for tax evasion, improve compliance, and combat the shadow economy."
