Ukrainian Parliament confirms that IMF will push Ukraine to formalize its economy
Photo: Danylo Hetmantsev (Vitalii Nosach, RBC-Ukraine)
The International Monetary Fund will demand that Ukraine formalize its economy. This issue was discussed between the Ukrainian authorities and the IMF mission, according to the Telegram channel of Danylo Hetmantsev, head of the Verkhovna Rada Committee on Finance, Tax, and Customs Policy.
"As Bloomberg notes, following the IMF mission’s visit to Ukraine, the IMF will, in particular, require us to formalize our economy under the new program. Indeed, during my meeting with the IMF mission, this issue was discussed among other sources of deficit financing," Hetmantsev said.
The committee head welcomes any efforts toward formalization, which he has been working on since 2019.
"And indeed, in the shadow economy, we can find at least UAH 900 billion per year. And I am confident that we do not need to be forced into formalization. It has become, through the efforts of a few, a matter for everyone. Everyone, except for a small group of tax dodgers and their accomplice-corrupt officials, whose numbers are decreasing daily," he added.
IMF spots huge shortfall in Ukraine’s financing
According to Bloomberg, the International Monetary Fund (IMF) believes that Ukraine’s financing needs for 2026 and 2027 could be much higher than Kyiv’s estimates.
A source said that the discrepancy in assessments emerged during the latest IMF mission visit. Resolving these differences is crucial before the Fund considers a request for a new credit program.
If the IMF’s estimates prove accurate, Ukraine may need additional financial support of several billion dollars per year as the country continues to repel Russia’s military aggression. Since the war has entered its fourth year with no end in sight, concerns are growing that Ukraine may struggle to meet rising military needs.
Currently, Kyiv is sticking to its forecasts, according to which it needs up to $37.5 billion over two years. Bloomberg reports that the Fund estimates the total amount could be $10–20 billion higher.
The outlet notes that the current program, running until 2027, assumed the war would end in 2025. At present, Ukraine is seeking a new tranche before the end of the year.
Meanwhile, the government faces difficulties in finding a balance. The IMF is concerned about the challenge of verifying military payments, "many of which may not be entitled to maximum benefits."
Ukraine is reluctant to increase its tax burden. Therefore, the Fund plans to encourage Ukraine to reduce the shadow economy, which the Cabinet of Ministers estimates at over 30% of GDP.
