The International Monetary Fund has reached a staff-level agreement with Ukraine on the first review of its four-year, US$8.1 billion Extended Fund Facility arrangement, approved in February 2026, making available approximately US$690 million in new financing pending IMF Executive Board approval. The disbursement would bring total IMF disbursements under the programme to US$2.2 billion.
Ukraine's economy faces mounting headwinds. The IMF projects GDP growth will slow to between 1.0 and 1.6 percent in 2026, reflecting the combined impact of Russia's continuing war and spillover effects from the Middle East conflict. This marks a significant deceleration from the modest recovery seen in 2024 and 2025, as the war continues to take a heavy toll on the population and productive capacity. Despite these pressures, the IMF noted that macroeconomic stability has been broadly maintained through sound policies and large-scale external support from Ukraine's international partners.
The National Bank of Ukraine has kept adequate international reserves, preserved financial stability, and anchored inflation expectations despite successive external shocks. The central bank has appropriately delayed its easing cycle and adopted a tightening bias amid supply-side shocks and a closed output gap, according to the IMF. The exchange rate has become more flexible, enhancing its role as a shock absorber and helping safeguard reserves against a buildup of external imbalances.
All quantitative performance criteria and indicative targets for end-March were met, although progress on structural reforms has slowed. Two structural benchmarks for the first quarter were implemented with a delay, and one was missed. The agreement includes a revised timeline for reforms, corrective actions to address slippages, and additional policy commitments. The IMF statement said Ukraine's programme remains fully financed backed by continued large-scale external support.
On fiscal policy, the IMF said Ukraine needs to guard against expenditure overruns, mobilize additional domestic revenues, and identify potential savings. Expenditures will remain elevated over the medium term for defense and reconstruction. Reforms to reduce the size of the informal economy remain a key programme pillar to mobilize revenues while supporting growth. Commitments under the programme include removing the VAT customs exemption for parcels and measures to tackle international transfer pricing.
The IMF also called for renewed efforts to strengthen governance and anti-corruption institutions. Recent corruption cases have underscored the need for accelerating reforms to state-owned enterprises and banks, including merit-based management appointments, improved transparency, and effective supervisory boards. The independence of the National Bank of Ukraine remains a critical pillar for maintaining macrofinancial stability, the IMF said.
The outlook remains exceptionally uncertain as the war continues. The Article IV discussions focused on policies to promote strong post-war growth by creating a dynamic market-based economy, including tax system reforms and reducing the large informal sector. Ukraine's ability to compete successfully in the EU single market will depend on determined implementation of these reforms, the IMF said. The programme provides an anchor for economic policy in times of exceptionally high uncertainty.
Sources: IMF, Reuters
