Kristalina Georgieva. photo: 112.ua
The state of preparations for a new $8.1 billion IMF program for Ukraine changed after the New Year. Kiev wants to adjust the terms of the program, which were previously agreed by both sides.
RBC-Ukraine quoted several sources as saying that the Ukrainian side raised the issue during meetings with IMF director Kristalina Georgieva at the end of the second decade of January. Based on the statement she made after the meeting with the president and other officials, the IMF does not welcome Ukraine’s idea.
The memorandum between the IMF and Ukraine was agreed as early as November 26, 2025. However, Ukraine has not yet confirmed its readiness to implement the agreements. This is also because it hopes to adjust the terms of the program. In particular, to agree on the exclusion of one of the priority conditions – prior actions on the introduction of VAT for FOP.
Conditions in this category may be included in the memorandum before a new program is concluded, or they may arise in the course of revising the program to receive the next tranche. These are usually important and unpopular reforms that are not favored by the borrower. Deadlines for accomplishing prior actions cannot be postponed. Otherwise, the board does not take a decision and lending does not start or is suspended.
There are several prior actions in the new program. These are the preparation and submission to the Rada of the law on the introduction of VAT for FOPs with annual revenues over UAH 1 million and the adoption of the law on the taxation of Internet platforms – the so-called “OLX tax”, and parcels, regardless of their value.
The conditions on digital platforms and parcels come in a single package, which also includes a provision to extend the 5% military tax for the post-war period.
Ukraine’s negotiations with the IMF, which led to these conditions, took place amid an energy corruption scandal. Realizing the precariousness of their position, the Ukrainian authorities did not resist the creditor’s demands. And at first they considered them quite feasible.
However, the possibility of introducing VAT caused a negative resonance among the public. FOPs (individuals-entrepreneurs) are the simplest form of doing business, allowing them to work legally, hire employees and use the simplified tax system. There are about 660 thousand of them in Ukraine. The authorities do not want to provoke a backlash from small businesses.
But there are still two unpopular conditions – parcel taxes and digital platforms. So far the problem is more in them. The law on platforms and parcels should be finalized soon.
The best option for Ukrainian authorities would be to remove the VAT condition from the list of prior actions. But the IMF is unlikely to agree to this. In addition, the introduction of VAT for the FOP will have to bring about UAH 40 billion to the budget for 2027.
The only thing that can be done now is to revise the VAT conditions – the size of the revenue ceiling and the timing of the start of tax collection. The IMF recognizes this option, but the issue has not yet been discussed with the Fund.
The absence of an IMF program in February will also slow down the €90bn loan from the EU. Kiev expects some of these funds to be released as early as April.
