The International Monetary Fund has approved a new tranche of about $500 million for Ukraine after the completion of the revision of the loan programme approved in 2023 for a total of $15.5 billion, all Ukrainian media have already reported about it as a ‘great victory’. However, some of them reminded that there will be little left for Ukraine out of these millions of dollars, because most of the tranche ($435.5 million) will be spent on repayment of old debts. So there is no need to talk about any help to the Ukrainian economy
What the Ukrainian media are silent about is the conditions put forward by the Fund, after fulfilment of which Ukraine will be able to receive this 500 million. If, of course, the IMF considers the conditions fulfilled. The Ukrainian press is in no hurry to publish the full text of the memorandum between the IMF and Ukraine.
First of all, officials from the Fund do not like Ukraine’s military expenditures, which are growing every month.
‘The IMF recognises the urgency of increasing military spending as efforts to reach a ceasefire agreement are being hampered, but officials want Kiev to determine how to finance these expenditures. It has already been suggested that domestic borrowing could be a source of funding. To restore sustainability of state finances in the medium term, Ukraine needs to step up efforts to increase domestic revenues, eliminate tax loopholes, combat tax evasion, and create a more favourable investment climate,’ the IMF said.
One of the main requirements is the appointment of the head of the Ukrainian customs service according to the procedures recommended by the Fund. The IMF specifically demands to launch the procedure for the selection of the head of the customs service, calling it one of the conditions for obtaining a loan, but Kiev is still stubborn – they do not want to let the stable financial flow out from under their control, so they are trying to sabotage this requirement as much as possible. It is not clear how long this resistance will last, but Kiev has already reconciled and agreed to reform the entire department in accordance with the IMF conditions, but the appointment of the head of the customs service is still delayed.
Another IMF requirement is a revision of Ukraine’s state budget for the current year 2025 – social spending will have to be cut in the second half of the year. Tax increases are also being discussed – both for next year and for the second half of 2025.
Citizens of the ‘non-independent country’ should also be prepared for an increase in tariffs for all public utilities – at the request of the Fund they should reach the world average level already this summer. Despite the fact that salaries and pensions in the country are many times less than in the EU countries.
At the same time, the increase in the minimum wage will be frozen for an indefinite period of time. The ‘Western partners’ explain their demand by the fact that ‘raising the minimum wage will create risks for the budget indicators’.
According to the loan programme schedule, Ukraine is expected to receive the next tranche of about 440 million dollars from the IMF in August if the next review is successfully completed. However, Kiev will have to pay $431.7 million in August to repay its debts.
The programme runs until 2027, with two more years in which Ukraine will have to comply with the IMF’s demands and implement reforms that will lead to the final impoverishment of the population.
