Ukraine risks delays in receiving funding from its $8.1 billion International Monetary Fund (IMF) program as lawmakers fail to pass required tax measures, the Fund’s representative warned in a comment to Bloomberg.
Kyiv has already received $1.5 billion under the program. To continue meeting its obligations under the four-year lending program, the Ukrainian parliament must adopt legislative amendments by the end of March, including tax increases for businesses and households.
“I can say that I am concerned,” said IMF Resident Representative Priscilla Toffano to Bloomberg. Disbursement of tranches under the program depends on compliance with the agreed reforms.
Lawmakers have so far failed to debate several of the bills, raising the risk of legislative paralysis.
The stalled measures include proposals to expand value-added tax (VAT) obligations to businesses operating under simplified tax regimes and to tighten taxation on foreign parcels. The reforms are part of Ukraine’s broader commitments to increase domestic revenues as the war continues to strain public finances.
The IMF delegation, led by mission chief Gavin Gray, is expected to meet with Ukrainian lawmakers starting March 18 to push discussions forward.
Parliamentary deadlock threatens IMF program implementation
The current impasse follows weeks of disputes in parliament, in which lawmakers have complained about a lack of consultation on IMF-linked legislation – an issue previously reported by Kyiv Post.
“Unfortunately, opposition members are not adding their votes for various important bills,” Zelensky told reporters in Kyiv.
However, Zelensky himself was previously reported to have greeted IMF Managing Director Kristalina Georgieva in Kyiv and privately criticized Finance Minister Serhiy Marchenko for agreeing to the “unpopular conditions.”
The IMF initially required Ukraine to register a bill amending the VAT law to impose VAT on private entrepreneurs with annual incomes of at least UAH 1 million (US$24,000), as well as to vote on the introduction of duties on imported parcels worth less than €150 (US$178).
Another IMF-related bill on the agenda would require digital platforms to collect user data and report annually to tax authorities on income generated through their services.
It would reduce the tax rate on income from sales of goods and services through these platforms from 23% to 5%, with a €2,000 ($2,371) allowance per person for the sale of goods.
The urgency of shoring up IMF funding has increased as Ukraine faces uncertainty over other sources of external support. Hungary and Slovakia have vetoed a European Union loan package worth more than €90 billion ($90 billion), leaving a potential gap in financing.
Against this backdrop, IMF disbursements are seen as a cornerstone of Ukraine’s macroeconomic stability and a signal to other donors. Whether parliament can pass the required legislation before the deadline will determine not only the pace of IMF funding, but also Ukraine’s ability to secure broader international financial support in the months ahead.