IMF eases conditions for new US$8.1bn Ukraine lending programme

The International Monetary Fund has agreed to drop the prior actions required for a new US$8.1 billion lending programme for Ukraine, removing requirements on VAT for sole traders, duties on parcels, a tax on digital platforms and the retention of the wartime levy.

Source: Ukrainian Prime Minister Yuliia Svyrydenko speaking to journalists, as reported by Suspilne, Ukraine's public broadcaster

Details: Svyrydenko said the new programme is expected to be considered at the next meeting of the IMF's executive board. She said the changes were made following a visit to Kyiv by the Fund's managing director, Kristalina Georgieva. Under the revised agreement with the IMF, all four conditions now need to be completed after the executive board approves the new programme.

Quote: "The most sensitive issues in the IMF programme are taxes on individual entrepreneurs. Details matter. In our work with the IMF, we agreed to raise the VAT threshold for sole traders to UAH 4 million [US$92,800]. This is the maximum threshold for VAT on goods in Europe. This means the changes will not affect two-thirds of sole traders in Ukraine."

More details: Svyrydenko said the government plans to submit one consolidated tax bill to the Verkhovna Rada (Ukrainian parliament) covering digital platforms, parcels, and the retention of the wartime levy after martial law ends.

There will be further discussions with the IMF on when the changes will take effect.

Background:

• On 14 February, Svyrydenko also said that the provision of €90 billion to Ukraine by the EU is linked to the approval of a new four-year IMF programme, which is expected in February.
• It was also reported that the IMF Board of Directors may approve a new four-year Extended Fund Facility (EFF) programme for Ukraine in February, but this will depend primarily on whether Ukraine has fulfilled the previously agreed prior actions.

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