IMF and Ukraine begin talks for new loan program amid looming financing shortfall
A team from the International Monetary Fund (IMF) has started discussions with Ukrainian authorities in Kyiv, after the country requested assistance from the organization in September 2025 to help cushion its stretched finances.
Ukraine spends all of its own tax revenues on the military — about $62.8 billion next year, according to the draft state budget for 2026 — and relies on foreign financing to pay for everything else, including pensions, schools, and hospitals. But the country is rapidly approaching a sharp drop in promised aid, and needs $61 billion to balance its books in 2026 and 2027.
The stakes were raised after European countries failed to back a 140-billion-euro "reparations loan" initiative, an elaborate legal and financial plan to lend Russia's central bank reserves to Ukraine, which were frozen by sanctions after Russia's full-scale invasion.
A new IMF program would play a small but important role in plugging the financing gap. Ukraine has received $10.6 billion under a current $15 billion IMF program, which will expire in 2027, and is seeking to negotiate a new program over 2026–2029, reportedly worth $8 billion.
"The current IMF program was implemented on the back of expectations that the war would be over by 2026," says Serhiy Fursa, deputy managing director at Dragon Capital.
"Now we know that this won't happen, Ukraine needs much more financing, including a new IMF program," he said.
But without agreement over the reparations loan, the IMF board cannot approve new financing. The IMF only lends to countries that can credibly maintain sustainable levels of debt, which is why a new program hinges on concrete commitments from Europe.
Negotiations will therefore likely center around what a future program could look like, once external funding is secured.
"The discussions will cover the authorities’ economic policy objectives (...) and structural policies to strengthen governance, combat corruption, and enhance growth," Priscilla Toffano, the IMF's representative in Ukraine, said in a press release.
The IMF is encouraging Ukraine to find new ways of raising revenue domestically, including through 'deshadowing' its economy and reforming its customs services.
Ukraine's Finance Minister Serhii Marchenko said in a press release that "the new program will help meet Ukraine’s budgetary needs in the medium term and support the implementation of structural reforms aimed at economic recovery and European integration."
