IMF revises downside scenario in updated Ukraine programme, does not rule out further deterioration

The International Monetary Fund (IMF) has made minor adjustments to the downside scenario for Ukraine during the eighth review of its Extended Fund Facility (EFF), while acknowledging that alternative, more pessimistic scenarios remain possible.

Source: document released on the IMF website, as reported by Interfax-Ukraine

Details: The IMF acknowledges that the risks posed to the downside scenario are extremely high. It notes that possible alternative downside scenarios could involve different war durations or less durable peace outcomes. However, it considers modelling these alternatives to be premature at this stage due to ongoing peace negotiations and their uncertain results.

The current downside scenario assumes the war will end in the second quarter of 2026. 

During the eighth review, the timing of the economic shock was shifted to the third quarter of 2025.

Under this scenario, Ukraine’s real GDP is projected to contract by 1% this year – 1 percentage point more than in the previous review – remain flat next year (0.5 percentage points lower than earlier projections), and grow by 3.8% in 2027, unchanged from prior estimates.

The review also identified additional risks, including escalation and prolongation of the war, reductions in external economic and military assistance, as well as populist pressures and increasing resistance from various actors. These risks could complicate reform efforts, particularly within parliament.

Background: Ukraine recently received its ninth tranche of approximately US$500 million from the IMF under the four-year Extended Fund Facility programme.

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