On 10 September 2024 the IMF and the Ukrainian authorities reached agreement on the Fifth Review of the four-year Extended Fund Facility (EFF) Arrangement, subject to approval by the IMF Executive Board. The statement issued by the IMF noted that Ukraine met the quantitative performance criteria (QPCs) up to the end of June 2024 and understandings were also reached on policy settings and reforms to sustain macroeconomic stability.

The IMF noted that Ukraine’s economy remained resilient in the first half of 2024, but the outlook remains exceptionally uncertain and the continuing war will require determined policy efforts and large-scale support from donors. The Ukraine war is significantly impacting the country, but real GDP grew by 6.5% year on year in the first quarter of 2024, owing to strong policies, adaptability of households and firms and external financing.

An economic slowdown is expected in the second half of 2024 as a consequence of attacks on energy infrastructure and the war’s impact on labour markets, and growth is projected at 3 percent for 2024. As the war is expected to continue during 2025, real GDP growth is projected to be between 2.5 and 3.5 percent. The 2025 Budget must include determined domestic revenue mobilization efforts. External financial support is also indispensable for maintaining economic stability.

Tax revenues must increase to create space for critical spending and restore fiscal sustainability. To achieve this, Ukraine must implement permanent tax policy measures and close existing opportunities for tax evasion. Measures must be taken to improve tax compliance and combat the shadow economy, in line with the National Revenue Strategy (NRS). Legislation is also required to reform the Customs code, confirming the central role of the Finance Ministry in overseeing customs.

Ukraine needs to have effective governance frameworks to achieve lasting economic growth. This will level the playing field for firms and will be a step on the path to EU accession. Ukraine must enhance the independence and competence of anti-corruption and judicial institutions. This will involve strengthening the criminal procedural code and setting up a new high administrative court. Reforms are also required to the Accounting Chamber of Ukraine.