Terms of peace deal to be crucial for Ukraine's macroeconomic outlook – IMF mission chief

The International Monetary Fund (IMF), in its new four-year Extended Fund Facility (EFF) for Ukraine, for the first time since late 2023 has outlined not only a baseline and downside scenarios but also an upside scenario based on more ambitious reforms. However, the macroeconomic outlook will depend decisively on the terms of a peace agreement, IMF Mission Chief to Ukraine Gavin Gray said.

He said that the IMF recognizes that the terms of any peace agreement are critical. The quality of security guarantees and the precise conditions will determine where Ukraine may end up within the possible range of scenarios, he said at a briefing on the new program.

Gray also stressed that government policy on reforms after a peace agreement will be another significant factor.

Progress on key reforms, especially governance and anti-corruption efforts, will have a very large impact on productivity growth in the future, as well as on whether policies are implemented that encourage Ukrainians to return home, the mission chief said.

He said that the IMF had previously expected Ukraine’s economy to grow in 2025 within a range of 2% to 3%, but in the new program it revised that estimate downward in the baseline scenario to 1.8%–2.2%.

He said that for 2026, the IMF had previously assumed that the war would end, so in its eighth review of the previous EFF in June 2025 the Fund projected growth of 4.5%. Clearly, circumstances have changed, and therefore the IMF now expects a range of 1.8% to 2.5% in 2026, Gray said.