The International Monetary Fund (IMF) has included in the Extended Fund Facility (EFF) program a new structural benchmark with a deadline of December 31, 2026, which calls for the submission to the Verkhovna Rada of specific rules to combat tax evasion under the simplified tax system.
According to the updated EFF Memorandum of Understanding, the new legislation is intended to address the issues of artificially splitting businesses to maintain preferential limits, manipulative switching between tax regimes, and the use of the simplified system to conceal actual employment relationships and evade taxes on wages and the Unified Social Tax (UST).
At the same time, IMF experts recommended revising the draft of the new Labor Code regarding the definition of employment, noting that the requirement to meet at least five of eight criteria to establish an employment relationship places an excessive burden of proof on regulatory authorities, whereas meeting three criteria is sufficient.
According to the memorandum, the fight against the shadow economy requires additional resources for all tax authorities; therefore, following the appointment of a new head of the State Customs Service (SCS) in April 2026, the government must ensure sufficient funding is available for the re-certification of all customs officials, which is scheduled to begin in mid-2026. In addition, the 2027 budget must provide sufficient funding for the State Customs Service (SCS), the State Tax Service (STS), and the Economic Security Bureau (ESB) to improve their ability to hire and retain qualified personnel.
In the document, the government highlighted the challenges of passing legislation in parliament but noted that it remains committed to eliminating the VAT exemption for sole proprietors, given its importance for combating the shadow economy, mobilizing revenue, EU accession, and attracting donor support. Although the government considers improving tax administration to be extremely important, it sees greater risks in this area than the Fund’s staff does, as administrative reforms could lead to revenue losses if they are not carefully planned and implemented.
As reported, the IMF Executive Board approved the first review of Ukraine’s four-year EFF program early Tuesday morning, allowing for the immediate disbursement of approximately $690 million in the second tranche; however, it noted the failure to meet several performance criteria and cautioned against backsliding on reforms. Taking the first tranche into account, total disbursements under the program—which has a total value of $8.1 billion and was approved in late February of this year—will amount to approximately $2.2 billion.
The updated Memorandum on Ukraine’s Economic and Financial Policies under the Extended Fund Facility (EFF) program with the International Monetary Fund (IMF), following the results of its first review, also includes seven new structural benchmarks, six of which are fiscal.
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In 2027, Ukraine may begin the process of gradually raising electricity and gas rates for households after developing appropriate protection programs.
This is stated in the updated memorandum on Ukraine’s economic and financial policies under the Extended Fund Facility (EFF) program with the International Monetary Fund (IMF), following the results of its first review.
“The government has committed to conducting an assessment by the end of February 2027 of utility support programs aimed at protecting vulnerable households. Once appropriate protection programs have been developed, household tariffs should be gradually increased—this process can begin in 2027,” the document’s authors state.
According to the text of the memorandum, the goal of this process is to meet the needs for recovery and debt reduction in the energy sector, while full price liberalization will eventually be necessary to attract post-war investment.
“The Ukrainian government (IF-U) emphasized that tariff increases should occur only after an assessment and, if necessary, reform of existing social protection systems,” the authors of the document noted, among other things.
It is noted that large-scale quasi-fiscal measures in the energy sector and the existing tariff structure pose serious risks to investment, reconstruction, and the development of a stable energy supply and power grid.
According to preliminary expert estimates—which will be refined during future technical assistance—fixed energy tariffs that are below market rates—in particular, due to moratoriums imposed since the start of the war—cost at least 2.2% of GDP annually in the form of off-target subsidies resulting from the quasi-fiscal activities of state-owned energy enterprises, while targeted transfers for public utilities account for about 0.6% of GDP in the budget.
“Significant fiscal risks arise from fixed utility rates for households, which currently amount to about 55% of comparable supply contracts,” the document states.
As a result, the energy sector is increasingly relying on in-kind contributions, grants, and preferential financing to meet its needs for repairs and imports. For example, Naftogaz took on additional debt to finance repairs and imports, causing its debt to rise by 63% year-over-year in 2025. The government is currently seeking donor support to ensure the timely completion of necessary repair work and the implementation of plans to strengthen resilience, the authors of the document noted.
Montenegro’s economy will demonstrate average annual growth rates of around 3% in 2027–2031, according to an updated forecast by the International Monetary Fund (IMF).
According to data from the Serbian Economist Telegram channel, these rates will be higher than the average figures both for European Union countries and for eurozone states, where more moderate economic growth is expected during the period under review.
Experts note that Montenegro is maintaining its position as one of Europe’s most dynamically developing economies, although it is not yet among the regional leaders in terms of growth rates. In their opinion, in order to accelerate economic development and reduce the gap with the most developed EU countries, the country needs to increase the volume of investment in the manufacturing sector, digital technologies, innovation, and other industries with high added value.
At present, the main drivers of Montenegro’s economy remain tourism, construction, and the services sector. However, economic diversification and the development of industrial production are regarded as key conditions for ensuring sustainable long-term growth and increasing the country’s competitiveness.
The International Monetary Fund forecasts that Ukraine will be one of Europe’s fastest-growing economies in 2027–2031, according to a Euronews analysis based on data from the IMF’s World Economic Outlook. The primary source of the data is the IMF’s World Economic Outlook database, which publishes country-specific forecasts, including real GDP growth figures through 2031.
According to Euronews’ calculations, the IMF expects Ukraine’s economy to grow at an average annual rate of 3.8% from 2027 to 2031. The strongest year in the forecast period is expected to be 2028, when growth could reach about 4.2%. Based on this indicator, Ukraine ranks among the top five European economies expected to grow more than twice as fast as the eurozone.
In the list of Europe’s fastest-growing economies, Ukraine is ranked after Malta and Kosovo. Further down the list are Serbia, with an average annual growth rate of 3.52%, and Moldova, with a forecast of about 3.5%. By comparison, according to the IMF, the eurozone economy is projected to grow by an average of 1.2% per year from 2027 to 2031, while the EU economy as a whole is expected to grow by approximately 1.4%.
The key factor driving Ukraine’s growth is cited as the post-war recovery of its economy and infrastructure. Euronews notes that the IMF’s forecast is effectively a recovery scenario: it assumes a gradual de-escalation of the war and the launch of large-scale investments in reconstruction. According to the report, the estimated cost of reconstruction is approaching $600 billion.
At the same time, the outlook for Ukraine remains one of the most uncertain in Europe. In its June 12, 2026, report on Ukraine, the IMF explicitly noted that the country’s prospects remain “extremely uncertain,” as the war continues to inflict severe damage on the population and the economy. The IMF also indicated that Ukraine’s GDP growth in 2026 could slow to 1.0–1.6% due to the consequences of Russia’s ongoing war against Ukraine and external shocks.
It is precisely this difference between the short-term and medium-term outlooks that is the key element of the forecast. In 2026, the Ukrainian economy remains under pressure from military risks, infrastructure damage, fiscal expenditures, labor shortages, and high dependence on external financing. However, in 2027–2031, provided the security situation improves, recovery could become the main source of growth.
For Ukraine, this forecast implies that the country could become one of Europe’s most dynamic economies—not through typical cyclical growth, but through the effects of post-war reconstruction, investments in infrastructure, construction, energy, logistics, industry, and integration with the EU market.
However, this scenario depends directly on security, international aid, the sustainability of public finances, the pace of reforms, and the ability to attract private capital.
Without a reduction in military risks, growth could turn out to be significantly lower: Euronews notes that under the IMF’s adverse scenario—assuming intense hostilities continue—Ukraine’s growth in 2027 could be only about 1%.
Thus, in the IMF’s projections, Ukraine appears to be one of Europe’s most promising economies for the 2027–2031 period, but this potential remains closely tied to the end of the war, the scale of reconstruction, and the country’s ability to translate international support into long-term economic growth.
The protracted conflict in the Middle East could worsen market sentiment, increase inflationary pressures, and slow economic growth, said International Monetary Fund Managing Director Kristalina Georgieva, speaking at a symposium organized by the Japanese Ministry of Finance.
According to her, in the new global environment, authorities should “think about the unthinkable and prepare for it.” Georgieva noted that the global economy is once again being tested for resilience due to the new conflict in the region.
According to the IMF chief, if oil prices remain 10% higher for most of the year, this could add about 0.4 percentage points to global inflation.
Against this backdrop, oil prices rose more than 25% on Monday, reaching their highest level since mid-2022. Rising energy prices are fueling fears of a new round of inflation and a slowdown in global economic activity, as well as complicating the scope for further monetary policy easing by leading central banks.
The International Monetary Fund (IMF), in cooperation with Ukraine, is working to improve corporate governance in all state-owned enterprises, not just selected ones. This work includes transparency in the formation of supervisory boards, improving the efficiency of the decision-making process, and transparency, as reflected in the new four-year Extended Fund Facility (EFF) program, said Suchanan Tambunleurtchai, Deputy Head of the IMF Mission to Ukraine.
“One of the commitments made by the authorities is to start publishing the financial statements of key state-owned enterprises in order to make these key performance indicators available to the public so that the public and other stakeholders can also assess the performance of these state-owned enterprises,” she said at a briefing on Friday.
At the same time, Tambunleurtchai clarified that the IMF does not have specific quantitative targets for state-owned enterprises under the program.
According to Ukraine’s economic and financial policy memorandum published by the Fund on Friday, the publication of financial statements of leading state-owned enterprises in accordance with IFRS standards will resume by the end of June 2026, with appropriate edits to protect critical infrastructure and an extended publication period of up to one year.
“We will introduce mandatory annual financial audits for leading state-owned enterprises, for which adequate funding will be provided, by making appropriate legislative changes if necessary. We will ensure the publication of audit reports, starting with the 2025 financial audits, by the end of August 2026,” the memorandum also states.
By the end of June 2026, the development of an annual report for state-owned enterprises will also begin in accordance with the requirements of the Standard Operating Procedure (SOP), which will be appropriately expanded to include information on the financial performance of leading state-owned enterprises using a common set of indicators, payments to the state budget and fiscal support, specific PSO obligations, and quasi-fiscal activities of each enterprise. Such a report will be published annually, starting at the end of September 2026 for 2025, and will be gradually expanded to cover more state-owned enterprises.
In addition, Ukraine has committed to ensuring the publication of financial statements reflecting the separation of PSO-related and non-PSO-related activities for all state-owned enterprises subject to PSOs by the end of June 2027.
“We will amend the State Property Policy and the Law ”On Joint Stock Companies” (2465-IX) to provide that all charters of state-owned enterprises require a simple majority of votes for supervisory board decisions, except for the approval of the strategic development plan, and we will avoid provisions allowing veto or dominant majority requirements by the end of June 2026,” the memorandum also states.
According to the memorandum, all nominations and dismissals of CEOs of state-owned enterprises will be decided by a simple majority vote of the supervisory boards, with corresponding amendments to the charter, if necessary.
“We will ensure that a comprehensive financial audit, compliance audit, and performance audit for all non-defense state-owned enterprises by reputable independent auditors is initiated by the end of June 2026,” the document states.
Another commitment is to publish a revised State Ownership Policy by the end of May 2026, which will more closely align with the OECD Guidelines for Corporate Governance of State-Owned Enterprises, as recommended in the 2025 OECD Review.
The government also noted that, in close consultation with international partners, it is exploring options for improving the management of state-owned enterprises, which also includes the potential introduction of a centralized model. This involves, in particular, defining the roles and mandates of key state institutions involved in the management of state-owned enterprises, such as the Ministry of Finance, the Ministry of Economy, the Cabinet of Ministers, other relevant sectoral ministries, and the State Property Fund (SPF).
“We will ensure a strong role for the Ministry of Finance as the body responsible for financial oversight of state-owned enterprises, limit quasi-fiscal risks, and help protect debt sustainability. It is important that any new system of state-owned enterprise management should not erode the government’s authority over dividend policy, ensuring that dividends from state-owned enterprises are directed to the state budget and reported transparently to ensure accountability and oversight,” the memorandum also notes.
Overall, the ultimate goal of centralizing state-owned enterprise ownership should be to professionalize the state’s ownership function, and any centralized management system should operate with caution, the memorandum says.
“This should be based on a clear legal mandate, ensure proper oversight by the Ministry of Finance and fiscal transparency, include reliable safeguards against political interference to ensure professional merit-based management, and require strict, internationally agreed reporting and accountability,” the memorandum emphasizes.
