IMF mission for first review of new Extended Fund Facility expected in Kyiv on May 27

The arrival of the International Monetary Fund (IMF) mission in Kyiv for the first review of the four-year $8.1 billion Extended Fund Facility (EFF) is expected on Wednesday, May 27, Ukrainian Finance Minister Serhiy Marchenko said.

"The mission is arriving on Wednesday," he told journalists in Kyiv on Friday on the sidelines of a roundtable organized by Ukraine’s leading business communities to discuss a draft law on taxation of parcels valued at up to EUR 150.

The EFF approved at the end of February this year currently includes a structural benchmark requiring the adoption of this law by the end of March this year.

Asked by journalists whether the Ukrainian side would try to negotiate a postponement of this commitment, Marchenko replied: "We will do everything possible, depending on the situation."

According to him, amendments to the budget will also be discussed, including increased payments to military personnel, though reaching an agreement on this issue will be significantly easier.

As reported, under the new facility Ukraine committed to adopting a law introducing VAT for simplified-tax-system entrepreneurs and for imported parcels cheaper than EUR 150 by the end of March. Regarding the former, Ukrainian officials said in mid-April that an agreement had been reached with the Fund to postpone implementation for one year, while the bill on parcels has so far only passed the committee stage. However, there is an attempt to pass this provision through another draft law that is expected to be put to a vote as early as next week.

The new $8.1 billion EFF for Ukraine replaced the previous four-year $15.6 billion program launched in March 2023 due to the prolonged war. Under the previous program, Ukraine received nine tranches totaling $10.6 billion. The first tranche under the new EFF, amounting to SDR 1.11 billion ($1.5 billion), was transferred to Ukraine’s state budget in early March this year. Three reviews are scheduled for this year – in early June, September, and December. If successfully completed, Ukraine will be able to receive two tranches of SDR 0.50 billion each (about $0.72 billion), as well as another SDR 0.70 billion (about $1.01 billion).

Overall, the new EFF foresees a total volume of external financing for Ukraine with the participation of international partners amounting to $136.5 billion under the baseline scenario and $146.3 billion under the adverse scenario.