IMF Funds Ukraine
IMF Approves New $8.1 Billion Ukraine Loan Package Despite Missed Reforms, Staff Deal Targets $700 Million
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Key Points
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Ukrainian lawmakers missed the IMF-linked deadline for legislation expanding VAT on foreign parcels—aimed at shrinking the “shadow economy”—including taxing parcels worth more than 45 euros at a 20% VAT rate plus other fees.
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The IMF Executive Board approved the new four-year EFF even though governance/public investment management benchmarks from the prior program were not fully met, by invoking the IMF’s “Exceptionally High Uncertainty framework.”
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The new EFF’s approval came with an initial disbursement of about $1.5 billion, which (per the report) had already landed in Ukraine’s accounts by March 3.
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Bloomberg reported a staff-level deal that could unlock nearly $700 million, but Reuters said it could not independently verify the details; Bloomberg sources also described the discussions as private (people familiar with the matter spoke anonymously).
The International Monetary Fund has reached a staff-level agreement with Ukraine that would unlock $690 million in fresh aid, according to Reuters. The deal, part of Ukraine's $8.1 billion four-year loan program, still needs approval from the IMF's Executive Board before any money moves.
Reuters reported that IMF Mission Chief Gavin Gray said Ukraine met its quantitative targets but needed "corrective actions to address slippages" to keep the program on track. Bloomberg first reported the deal early on June 12, citing private sources, though Reuters said it could not independently verify the details of that account.
Parliament Missed a Key Deadline, Then Scrambled
The deal almost fell apart over a single tax law. Ukraine's parliament, the Verkhovna Rada, was supposed to pass legislation by March 31 that would lower the tax-free threshold on foreign parcels from 150 euros to 45 euros. Parcels above that limit would face a 20% VAT plus additional fees. The goal was to shrink what officials call the "shadow economy" — untaxed goods flooding in from platforms like Temu and AliExpress, according to Interfax-Ukraine.
On May 26, the bill failed badly. It got only 127 votes in parliament — far short of the 226 needed, according to UA.NEWS. An IMF mission arrived in Kyiv the next day. By June 9, lawmakers passed a separate digital platforms tax bill to show progress. Under the staff-level deal, parliament now has until July to pass the parcel tax, according to Bloomberg sources.
IMF Used a Special War-Economy Exemption to Approve the Program
The new four-year Extended Fund Facility — a long-term IMF loan program — was approved on February 26 even though Ukraine had not fully met governance benchmarks from its prior program. The IMF invoked what it calls the "Exceptionally High Uncertainty framework," a rule that lets the Fund lend to countries facing major external shocks, like an ongoing war, according to Crypto Briefing.
The program is worth $8.1 billion total and is part of a $136.5 billion international support package. An initial $1.5 billion disbursement had already arrived in Ukraine's accounts by March 3. Ukrainian Prime Minister Yulia Svyrydenko called the IMF program the "anchor" for all international financial support, according to Ukrinform.
The Parcel Tax Is Unpopular — and Tied to EU Money Too
The tax is politically toxic. A Rating Group survey found that 29% of Ukrainians use international parcels for military needs and 26% for volunteer work. Critics say taxing those shipments during wartime punishes citizens supplying the front lines with drone parts and medical goods, according to Euromaidan Press.
But the stakes for passing it are enormous. The Ministry of Finance estimates the tax could raise between UAH 10 billion and UAH 27 billion — roughly $227 million to $614 million — per year. The EU has also linked 8.4 billion euros of its own financial support to the same reform, according to Bloomberg. Failing to pass the law by July could put the September IMF review at risk.
Bond Markets Signal Relief as War Budget Pressures Mount
Investors responded quickly to the deal. Ukraine's dollar bonds due in 2034 jumped to 70 cents on the dollar after the news broke — up sharply from 52 cents in March, according to Investing.com. That move shows markets are relieved the program is still alive.
The stakes are high because Ukraine runs a double-digit budget deficit, almost entirely financed by foreign aid. The $690 million tranche would cover "priority government expenditures" including salaries and infrastructure repair, per the IMF's official statement. Analysts at the Center for Economic Strategy say the IMF chose "flexibility over rigidity" — getting money into Ukraine now, while keeping pressure on lawmakers to act in July, according to Global Banking & Finance Review.
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