Kyiv hoping to convince IMF to delay key condition for $8.1 billion loan
Ukraine is seeking to soften key conditions of a new International Monetary Fund program amid domestic backlash to the measures, in negotiations that continued this week.
Kyiv is pushing to delay a new tax on self-employed entrepreneurs until after the war has ended, as well as raise the threshold at which entrepreneurs would start paying the levy, a person in the Ukrainian government familiar with the talks told the Kyiv Independent on the condition of anonymity.
Although Ukraine and the IMF reached a staff-level agreement last November, Kyiv hopes to find a compromise that will be more palatable to Ukraine's parliament.
But Kyiv's leverage is limited — finalizing the $8.1 billion IMF loan is required for securing a 90 billion euro ($105 billion) lifeline from the European Union, without which Ukraine's finances will run dry in a matter of months.
The renegotiations started on Jan. 21, a week after IMF chief Kristalina Georgieva told Reuters in an interview that she expected the Washington-based lender's executive board to give the final stamp of approval in "a matter of weeks."
The most politically contentious element of the new program is the new tax on self-employed entrepreneurs — a widespread employment status in Ukraine similar to a freelancer or contractor. Other divisive aspects include new taxes on imported goods and internet retailers.
The measures are intended to increase Ukraine's ability to raise revenues and bring more of Ukraine's economy out of the shadows.
"MPs are expecting elections at some point in the future," Mykhaylo Demkiv, financial analyst at Ukrainian investment firm ICU, told the Kyiv Independent.
"They don't want to vote for something unpopular that their voters will remember down the line," he said.
An end to Russia's war in Ukraine would trigger elections in the country, which have been suspended since Moscow invaded in 2022.
Attempts to pass a tax on internet retailers, the least toxic of the IMF's demands, failed three times in December and January due to a lack of support.
Ukraine's cabinet of ministers is hoping to submit a more politically viable proposal to the parliament after renegotiations with the IMF before the next parliamentary session.
Officially submitting the bill to the parliament for consideration is a precondition for the IMF program.
The IMF office in Kyiv declined to comment.
