IMF Begins Review of Latest Ukraine Loan as Kyiv Delays Tax Hike

The International Monetary Fund began its latest assessment of its loan program with Ukraine, even as Kyiv delays passing tax legislation as the lender expects.

The Washington-based lender sent its staff to the Ukrainian capital for talks that may open a path for another $1.1 billion tranche under the four-year initiative, according to a statement from Ukraine’s Finance Ministry published on Monday. If IMF officials confirm that Kyiv fulfilled all its commitments, the country will receive the funds in December. 

The statement said Ukraine should meet four “structural benchmarks,” including an assessment of financial risks to stability and a privatization strategy for state-owned companies. Ukraine’s central bank Governor Andriy Pyshnyi said in a Facebook post that the IMF team visiting Kyiv includes Emmanuel Mathias, a specialist on anticorruption and rule of law.

The IMF provided nearly $9.8 billion in loans to Kyiv since the Kremlin’s full-scale invasion. Including funds foreseen by the program but not yet disbursed, the sum will total more than $15 billion. 

However, the IMF’s previous assessment in September exposed divisions with Ukraine’s central bank over the pace of hryvnia devaluation and interest-rate policy, people familiar with the talks told Bloomberg News. 

The lender also considered a Ukrainian plan to raise taxes insufficient, proposing an increase in value-added tax, people familiar with the matter told Bloomberg News. Last month, Ukraine’s parliament passed legislation lifting several taxes, including the so-called military levy on households and small businesses. 

The law remains unsigned by President Volodymyr Zelenskiy, with no reason given for the delay. The government additionally plans to allocate a one-time payment of 1,000 hryvnia ($24) to every Ukrainian as economic relief.

The IMF also expressed concerns regarding the dismissal of the chief executive officer of Ukraine’s power grid operator.