Staff Level Agreement with IMF Reached on Seventh Review of Extended Fund Facility Arrangement

The mission of the International Monetary Fund (IMF) that conducted the Seventh Review of the Extended Fund Facility (EFF) program with Ukraine in Kyiv and Warsaw during 20-28 February 2025 has concluded its work.

The IMF team and the Ukrainian authorities have reached staff-level agreement (SLA). The agreement is subject to approval by the IMF Executive Board, with Board consideration expected in the coming weeks. This will unlock for Ukraine access to about SDR 0.3 million (USD 0.4 billion), bringing total disbursements under the program to USD 10.1 billion. Considering the current balance of payments needs, the Ukrainian side has requested the mission to adjust the payment structure under the EFF program by reallocating the financing to future reviews. The overall size of the program remains unchanged at USD 15.5 billion.

Program performance remains strong, according to the IMF statement. All end-December quantitative performance criteria have been met. Understandings have also been reached on a set of policies and reforms to sustain macroeconomic stability. The IMF acknowledged Ukraine’s progress in implementing reforms. For the Seventh Review, seven structural benchmarks have been met, while one was completed with a delay. Additionally, the Ukrainian authorities have reaffirmed their strong commitment to advancing other key reforms.

Ukraine’s economy continues to demonstrate resilience despite the consequences of three years of full-scale war. The IMF has estimated real GDP growth at 3.5% for 2024. According to the IMF, economic recovery is expected to slow to 2–3% in 2025 due to labor constrains, damage to energy infrastructure, and ongoing hostilities. However, risks to the outlook remain exceptionally high, given uncertainty about the duration of the war and prospects for peace and reconstruction.

Given the risks associated with rising inflation, the IMF noted that the National Bank of Ukraine’s (NBU) decision to raise its key policy rate by 1.5 pp in December was appropriate. Further monetary tightening may be needed should inflation accelerate or inflation expectations deteriorate. The exchange rate should continue to play a more active role as a shock absorber, while maintaining adequate international reserves remains a priority.

Financial sector stability has been preserved, but continued vigilance is warranted in light of elevated risks. Developing financial markets infrastructure, in its turn, will be critical to support rapid reconstruction and recovery through private investment, including attracting foreign capital. Comprehensive consultation and collaboration with financial market participants is instrumental in shaping the reform agenda, which the NBU has initiated in collaboration with relevant authorities.

According to the IMF's forecast, the state budget deficit in 2025 will remain substantial—around 19.6% of GDP (excluding grants). This includes additional revenues from an increase in excise taxes on tobacco products, which is a structural benchmark for the completion of the program review. The IMF underscores that covering the fiscal deficit will require substantial external support, including through the G7’s ERA Loans Initiative—up to $50 billion in nonrecourse loan financing secured by immobilized russian assets—to help maintain macroeconomic stability.

Responding to high budget risks will require preparedness with measures to increase revenues; in particular broad-based and durable ones, and accelerated implementation of Ukraine’s National Revenue Strategy. Determined implementation of reforms to mobilize domestic revenues, tackle tax evasion and avoidance, and improve the investment climate is essential for restoring medium-term fiscal sustainability, the IMF statement says. 

“I am grateful to the IMF team for their unwavering willingness to find collaborative solutions even in the face of extreme uncertainty. We are maintaining the dynamics and quality of our work under the program, and we are determined to do everything possible to continue the strong performance under the current program. Consistent leadership support from the IMF and our joint work are among the pillars of maintaining sustainable external financing,” said NBU Governor Andriy Pyshnyy.