On 28 March 2025, the IMF Executive Board approved the seventh review of the Extended Fund Facility (EFF). The successful completion of this review unlocks immediate access to SDR 0.3 billion (equivalent to approximately USD 0.4 billion), which will be channeled for budget support. Following this disbursement, total IMF financing under the program will increase to around USD 10.1 billion.
As previously reported, considering Ukraine’s updated balance of payments needs, the Ukrainian side has requested the mission to adjust the payment structure under the EFF program by reallocating part of the financing to future reviews. The overall size of the program remains unchanged at USD 15.5 billion.
The IMF’s release mentions that Ukraine’s performance under the Program remains strong despite challenging conditions. All end-December quantitative performance criteria have been met, as have the majority of structural benchmarks. Ukraine has also completed the prior action on enacting a law that raises tobacco excise taxes. New benchmarks, including measures to improve public investment management, have been established, while the timelines of some of the benchmarks have been adjusted to take into account current circumstances.
“The war continues to take a devastating social and economic toll on Ukraine. In spite of this, macroeconomic stability is being preserved through skillful policymaking as well as substantial external support,” said IMF Managing Director Kristalina Georgieva.
Although growth decelerated in H2 2024, it was sustainable throughout the year. The IMF is expecting that the slowdown in economic recovery will persist in 2025 due to an increasingly tight labor market and russia’s attacks affecting the energy infrastructure.
The IMF pointed out that monetary policy tightening by the NBU was an appropriate response to the current surge in inflation, which is primarily fueled by the growth in food prices. But inflation expectations remain well-anchored and reserves adequate, sustained by continued external support.
However, risks to the outlook are still exceptionally high amid uncertainty about the duration of the war. Contingency planning is key to enabling appropriate policy response should risks materialize. Greater exchange rate flexibility will help strengthen economic resilience while safeguarding reserves.
As the IMF’s press release points out, the financial sector remains stable, but vigilance is needed given heightened risks. Institutional weaknesses in the security markets regulator need to be tackled. Improving Ukraine’s capital markets infrastructure will be vital for attracting foreign capital for reconstruction.
Covering the budget deficit will require substantial external support and fiscal revenues. The enactment of the tobacco excise tax law is welcomed, as it supports the implementation of Ukraine’s National Revenue Strategy. Accelerated implementation of this strategy, including modernization of the tax and customs services, reduction in tax evasion, and harmonization of Ukrainian legislation with EU standards, is required to meet high-priority spending needs. This, combined with improvements in public investment management frameworks, medium-term budget preparation, and fiscal risk management, will support growth, investment, and fiscal sustainability.
The program remains fully financed, with a cumulative external financing envelope of USD 148.8 billion in the baseline scenario and USD 162.9 billion in the downside scenario, over the four-year program period, including the full utilization of the approximately USD 50 billion from the G7’s Extraordinary Revenue Acceleration Loans for Ukraine (ERA) initiative (nonrecourse loan financing secured by immobilized russian assets). Full, timely, and predictable external support – on terms consistent with debt sustainability – remains essential so that the program remains fully financed.
Ukrainian authorities continue working to complete their Eurobond debt restructuring strategy. Reaching agreement consistent with the program’s debt sustainability objectives is essential to reduce fiscal risks and create space for critical spending.
“We are grateful to the IMF team for its traditionally well-coordinated, effective, and professional cooperation. Ukraine’s performance under the Program remains strong. The Memorandum of Economic and Financial Policies with the IMF has been updated. We have already been working on tasks that are part of the eighth review. During the Spring Meetings of the IMF and the World Bank Group in Washington, D.C., we will have detailed discussions with our international partners on the Program’s progress in order to maintain sustainable support for our country,” said NBU Governor Andriy Pyshnyy.
On 31 March 2023, the IMF Executive Board approved a four-year Extended Fund Facility arrangement for Ukraine. Disbursements under the program are conditional on quarterly review results.