IMF: Ukraine needs to decide on budget scenario for 2026
MOSCOW. July 18 (Interfax) - The International Monetary Fund (IMF) has commended the budget resolution for 2026-2028 drafted by the Ukrainian government and envisaging two scenarios, namely, the end of the crisis this year and its continuation next year, but the government must now decide which of them the state budget draft for 2026 should be based on, Ukrainian media outlets quoted IMF mission head Gavin Gray as saying.
It is a critical issue which needs to be address before the budget for 2026 is submitted to the parliament on September 15, media outlets quoted Gray as saying at a budget discussion organized by the Center for Economic Strategy on Friday.
The scenario envisaging the end of the crisis this year is in line with the latest baseline scenario included in the IMF's Extended Fund Facility (EFF) program updated following its eighth review, Gray said.
The scenario envisaging the continuation of the crisis and the need for more budgetary funding in 2026 is looking increasingly likely now, and donors are focused on this issue, he said.
The IMF is expecting the government's decision and the Finance Ministry's proposal regarding the budget, he said, adding that he believes it would prompt a more in-depth analysis.
When considering obligations of the IMF and its partners in Ukraine, one needs to go beyond broad statements about challenges being possible in 2026 and be more specific, he said.
The IMF wishes to hold an in-depth discussion on the budget for 2026, because it wishes to significantly revise its assessment of the financing gap, it could possibly look like existing figures, or it could be bigger, he said, adding that the discussion needs to be effectively moved from the deadlock.
Everything is happening in the context of a new government in Ukraine, this is why partners are interested in a dialogue regarding the new government's other political tracks which are extremely relevant in the medium-term fiscal picture, he said.
As part of the EFF program, which has reached its record eighth review, Ukraine introduced a very strong package of reforms, and its implementation in the past and the future is crucial due to Ukraine's big dependency on external preferential financing, he said.
Restoring its resilience requires Ukraine to continue reforms, Gray said. The clarity regarding the government's strategy in a broader reform context is needed, he said.
He also called to maintain high taxation figures observed this year taking into account the need for large budget expenditures and a fair distribution of this burden.
Due to its need for external financing of $40 billion, Ukraine expects the IMF to continue and increase its financial support in 2026, media outlets quoted Verkhovna Rada Budgetary Committee head Roksolana Pidlasa as saying in a statement addressed to Gray.
Ukraine had to undergo eight reviews of the EFF program to attract over $6 billion, Pidlasa said. There are currently no reasons to believe that Ukraine's need for external financing would decrease in 2026. Former Ukrainian Prime Minister Denis Shmygal noted that the amount of necessary support remains at $40 billion, she said.
European Commission President Ursula von der Leyen publicly expressed concerns about the coverage of the unfunded portion of this amount worth $19 billion, she said.
Pidlasa also noted that no significant changes in the funding structure are expected. In 2024, as in all the previous years after the beginning of the crisis, over 70% of revenues of the state budget came from international support, and such proportion will remain as long as the crisis continues, she said.
As reported, Ukraine received the ninth tranche worth $500 billion from the IMF, and the fund has already provided $10.6 billion to Ukraine as part of the EFF program by now.
