IMF gives Ukraine until the end of March to raise taxes, otherwise it will not provide loans

The International Monetary Fund warned Ukraine about the risk of losing financial support due to delays in adopting tax changes. Parliament must meet the requirements by the end of March, otherwise new tranches may not arrive. Bloomberg reports on this here.

IMF and Taxes in Ukraine: What Requirements Have Been Set

According to sources, Ukraine must adopt a package of legislative changes that involve increasing the tax burden. This is necessary to receive about $8.1 billion under the loan program.

Among the key initiatives:

• introduction of VAT for part of the business under the simplified system

• changes to the taxation rules for international shipments

• other fiscal measures to increase budget revenues.

IMF expresses concern over delays in discussing these issues in the Verkhovna Rada. According to the fund's permanent representative in Ukraine, Priscilla Toffano, «I can say that I am concerned».

Financial Assistance to Ukraine: What Risks Arise

The situation is complicated by political tension within the parliament, which may delay the adoption of necessary decisions. There are also reports of possible disagreements between deputies and President Volodymyr Zelensky.

Additional pressure is created by the blocking of part of the funding from the EU. Hungary and Slovakia have vetoed a aid package of over 90 billion euros.

If external financing is delayed, Ukraine will have to look for internal resources. In particular, the National Bank may again resort to direct budget financing, as it did at the beginning of the full-scale war.

IMF representatives plan to start negotiations with Ukrainian deputies as early as March 18 to expedite the adoption of the necessary changes.

It is worth noting that Ukraine received the first tranche of $1.5 billion at the beginning of March under a new four-year program of the International Monetary Fund (IMF).