IMF approves $690 million for Ukraine as board flags reform delays and war costs
The International Monetary Fund on Monday unlocked a $690 million tranche for Ukraine as part of its $15.6 billion Extended Fund Facility, despite noting a slowdown in structural reforms and growing economic headwinds from war damage and Middle East spillovers.
The IMF board approved an immediate disbursement of about $690 million to Ukraine, the fund said in a statement on Monday. The payment is part of a four-year $15.6 billion Extended Fund Facility (EFF) programme designed to keep Ukraine’s economy afloat while it fights the war with Russia.
- All quantitative performance criteria and indicative targets met
- IMF staff and Kyiv agree on revised reform timetable and remedial actions
- IMF board approves $690 million disbursement
Reform delays and economic strain
The fund’s review found that Ukraine has maintained macroeconomic and financial stability despite the ongoing war, but the outlook has deteriorated. Intensified attacks on critical infrastructure and side effects of the conflict in the Middle East were cited as the main drags. The IMF noted that the pace of reform implementation has slowed, and several structural benchmarks were met late or not at all.
The pace of reform implementation has slowed, and several structural benchmarks were achieved with delay or not met.
All quantitative performance criteria and indicative targets were, however, met at the end of March, and the overall implementation of programme conditions was described as “generally satisfactory”. The Monday board meeting followed a deal struck with Kyiv in June on a revised reform timetable, remedial actions to tackle delays and additional policy commitments.
Tax measures and public pushback
Among the postponed reforms is a law that would have subjected foreign parcels valued above €45 to 20% VAT plus extra fees. The Ukrainian parliament did not pass the regulation after strong public opposition, and the IMF agreed to defer the deadline. Earlier, the fund also allowed a delay in requiring VAT on certain groups of self-employed entrepreneurs. That obligation was originally due to be adopted by parliament by April 2026.
The prolonged war has driven Ukraine’s budget deficit sharply higher, forcing the government to search for new revenue sources. The gap is largely financed by foreign partners, including the IMF, Bloomberg reported.
Governance, the shadow economy and energy prices
IMF mission chief Gavin Gray stressed that Kyiv must continue to shrink the shadow economy, fight corruption and strengthen the quality of state governance. The reforms are designed to improve the business environment and prepare Ukraine to compete in the European Union’s single market.
Ukraine must continue reducing the shadow economy, fighting corruption and strengthening the quality of state governance.
Kyiv is also working on a plan to gradually liberalise energy prices, with mechanisms to protect the most vulnerable households. In the longer run, the changes could allow the authorities to cut costly energy subsidies.
Link to EU support and IMF’s message
Maintaining the IMF programme matters beyond the fund’s own money. Meeting the agreed reform benchmarks is a condition for the gradual release of the EU’s €90 billion, two-year support package for Ukraine. IMF Managing Director Kristalina Georgieva said on Monday that preserving macroeconomic stability remains Ukraine’s near-term priority and called for prudent policies.
Maintaining macroeconomic stability remains a priority for Ukraine in the near future.
