The four-year program, which is expected to be approved, would replace Ukraine’s existing $15.5 billion IMF facility, helping Kyiv maintain economic stability and public spending as the war with Russia enters its fifth year. Ukraine has said it faces a budget shortfall of nearly $140 billion in the coming years.
IMF spokesperson Julie Kozack said Ukrainian authorities had completed prior actions required to advance the request, including submitting a draft labor code law and adopting a budget. Ukraine’s economic growth in 2025 is likely to come in below 2%, with the economy settling into a slower growth path and larger fiscal and current account imbalances after four years of war.
“Russia's invasion continues to take a heavy toll on Ukraine's people and its economy,” Kozack said, noting intensified Russian attacks on critical energy and logistics infrastructure. As of January, she added, 5 million Ukrainian refugees remained in Europe and 3.7 million people were internally displaced.
The World Bank, the Ukrainian government and the European Union are finalizing an updated estimate of Ukraine’s reconstruction costs, expected next week. The previous estimate stood at $524 billion, and experts anticipate a significant increase due to continued attacks on energy infrastructure.
IMF Managing Director Kristalina Georgieva said after a visit to Kyiv last month that the new program would reflect a worsening situation since a preliminary agreement was signed in November, though its core requirements would remain intact. The Fund is assessing which measures can be implemented quickly and which may need to be “calibrated,” including potentially giving Ukraine a year to secure parliamentary backing for a controversial VAT measure.
According to Prime Minister Yulia Svyrydenko, Kyiv has agreed with the IMF to ease some conditions, including planned tax increases for individual entrepreneurs. The government will introduce a value-added tax for them while raising the revenue threshold to 4 million hryvnias ($93,000) from 1 million hryvnias ($23,000). Analysts now expect around 250,000 entrepreneurs to be affected, compared with more than 600,000 under earlier plans.
The staff-level agreement assumes the war will end this year but includes a downside scenario in which it drags on and does not conclude until 2028.