The IMF is concerned about funding for Ukraine: the Rada is holding up the programme’s conditions
Bloomberg reports this, citing Priscilla Tofano, the IMF’s representative in Ukraine.
The IMF has expressed concern over whether Ukraine will be able to continue receiving funds under the $8.1 billion programme if parliament continues to delay the decisions needed to unlock the funding. According to Bloomberg, the Verkhovna Rada has until the end of March to adopt a package of legislative changes under the new four-year loan programme approved last month. These changes include tax increases for businesses and households.
According to the publication, MPs have not yet tabled some of the amendments demanded by the IMF. Bloomberg attributes this to demonstrative resistance to President Volodymyr Zelenskyy, which could potentially lead to parliamentary paralysis. At the same time, the measures themselves remain extremely unpopular with the public in the fifth year of the war, but without them, the remaining funding will not be released. Kyiv has already received $1.5 billion under the new programme.
“I can say that I am concerned,” Priscilla Toffano, the IMF’s resident representative in Ukraine, told Bloomberg. According to the agency, the IMF mission led by Gavin Gray is set to begin meetings with Ukrainian MPs on 18 March. The publication also notes that the Washington-based fund is Kyiv’s second-largest external donor.
A new surge in tension over funding has arisen amid the risk that Ukraine could face an acute shortage of funds in just a few months. Bloomberg reports that this is linked to Hungary and Slovakia blocking a European Union loan package worth over €90 billion in a dispute over oil supplies. In the worst-case scenario, if this money does not materialise, the National Bank may be forced to lend directly to the Ministry of Finance, as was the case during the first year of the full-scale invasion. NBU Governor Andriy Pyshnyy spoke of this possibility last week. Against this backdrop, IMF funds are becoming even more critical for Kyiv.
Bloomberg also quotes a statement made by Volodymyr Zelenskyy on Saturday regarding his willingness to discuss amendments to the mobilisation law with parliamentary representatives, “so that MPs can go to the front line”. In effect, this sounded like a warning: if someone does not serve the state in parliament, they can serve it on the front line.
According to the agency’s assessment, this conflict has become perhaps the clearest signal that the president can no longer automatically count on his parliamentary majority. Since the start of the war, Ukrainian MPs, including opposition representatives, have largely supported the government, but the situation may now be changing. Zelenskyy himself, as reported by Bloomberg, stated that the opposition “is not adding its votes” to various important bills, and even regarding non-urgent legislation, lengthy negotiations and persuasion are required. The president also said that many MPs plan to resign, without specifying details.
Among the changes that parliament is expected to approve, Bloomberg cites an amendment introducing VAT for households and companies registered under the simplified taxation system. Another requirement concerns lowering the threshold for taxing foreign parcels. Reuters previously reported that the IMF had insisted on tax and structural measures by the end of March to boost budget revenues and close tax loopholes.
