IMF staff reaches agreement with Ukraine on $690 million disbursement under aid program

The International Monetary Fund (IMF) and Ukraine have reached a staff-level agreement on the first review of Kyiv's four-year Extended Fund Facility (EFF) program, potentially unlocking approximately $690 million in additional funding, the IMF announced on June 12.

If approved by the IMF Executive Board, the disbursement would bring total funding provided under the program to roughly $2.2 billion.

"Ukraine's four-year EFF provides an anchor for the authorities' economic program in times of exceptionally high uncertainty," IMF mission chief Gavin Gray said in a statement following talks with Ukrainian officials.

The IMF said Ukraine met all quantitative performance criteria and indicative targets through the end of March, though progress on some structural reforms has lagged.

Two reform benchmarks were implemented later than planned, while another was missed entirely. The parties agreed on a revised reform timetable, corrective measures, and additional policy commitments to keep the program on track.

The fund noted that Ukraine has maintained broad macroeconomic stability despite Russia's full-scale war, supported by international assistance and domestic economic policies.

The National Bank of Ukraine has preserved financial stability, maintained adequate reserves, and kept inflation expectations under control, according to the IMF.

At the same time, the IMF warned that risks remain exceptionally high. Ukraine's economic growth is projected to slow to between 1% and 1.6% in 2026 due to the continued effects of Russia's war and broader geopolitical disruptions.

The IMF also emphasized the need for continued fiscal discipline and reforms aimed at increasing state revenues.

Planned measures include removing VAT exemptions on imported parcels, strengthening enforcement against tax avoidance schemes, reforming the simplified tax regime, and reducing the size of Ukraine's informal economy.

"Reducing the size of the informal economy remains the fairest and most effective way to mobilize essential revenues while supporting growth," Gray said.

The fund additionally called for renewed anti-corruption efforts, stronger governance of state-owned enterprises, and gradual reforms in the energy sector, including a roadmap toward market liberalization and future adjustments to household utility tariffs.

The agreement comes days after Ukraine's parliament approved legislation required under IMF and EU reform commitments, including a bill introducing taxation of income earned through digital platforms.

Lawmakers have also recently adopted other measures tied to international financing programs, including extending a military tax after the end of martial law and approving procurement reforms linked to a $3.35 billion World Bank loan.

However, several IMF- and EU-backed bills remain stalled in parliament, including legislation introducing taxes on small imported parcels and reforms targeting tax loopholes and financial oversight.